SOLOPOINT INC, SB-2/A, 1997-12-08

SOLOPOINT INC
SB-2/A, 1997-12-08
COMMUNICATIONS EQUIPMENT, NEC

Previous: CSK AUTO INC, 10-Q, 1997-12-08

Next: HOT TOPIC INC /CA/, 10-Q, 1997-12-08

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 8, 1997
REGISTRATION NO. 333-33263
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------

AMENDMENT NO. 4
TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

--------------

SOLOPOINT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

--------------

CALIFORNIA 3661 77-0337580
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization) --------------
130-B KNOWLES AVENUE, LOS GATOS, CALIFORNIA 95032
(408) 364-8850
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

--------------

EDWARD M. ESBER, JR.
CHIEF EXECUTIVE OFFICER
130-B KNOWLES AVENUE, LOS GATOS, CALIFORNIA 95032
(408) 364-8850
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)

--------------

COPIES TO:
MICHAEL J. O'DONNELL, ESQ. THOMAS J. POLETTI, ESQ.
RICK S. ARNOLD, JR., ESQ. Freshman, Marantz, Orlanski, Cooper &
VAHE H. SARRAFIAN, ESQ. Klein
ELAN Q.G. NGUYEN, ESQ. 9100 Wilshire Boulevard
Wilson Sonsini Goodrich & Rosati Eighth Floor, East Tower
650 Page Mill Road Beverly Hills, California 90212
Palo Alto, California 94304-1050 (310) 273-1870
(415) 493-9300 Facsimile: (310) 274-8357
Facsimile: (415) 493-6811

--------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

--------------

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par
value(2)(3)........... 6,900,000 shares $1.25 $8,625,000 --
- --------------------------------------------------------------------------------------------
Underwriter's War-
rant(4)............... 1 warrant $5.00 $5 --
- --------------------------------------------------------------------------------------------
Common Stock issuable
upon exercise
of Underwriter's War-
rant(5)(6)............ 600,000 shares $1.75 $1,050,000 --
- --------------------------------------------------------------------------------------------
Totals................. -- -- $9,675,005 $2,931.82*
============================================================================================
</TABLE>

* Registration fee of $2,921.37 previously paid.

(1) Estimated solely for the purpose of computing the amount of registration
fee pursuant to Rule 457(a).

(2) For the purpose of calculation of the registration fee, the shares of
Common Stock registered hereunder have been assumed to have a proposed
maximum offering price per share of $1.25 (the average of the high and low
prices reported in the Nasdaq SmallCap market on December 4, 1997).

(3) Includes 900,000 shares which the Underwriter has the option to purchase
to cover over-allotments, if any.

(4) In connection with the Registrant's sale of Common Stock, the Registrant
is granting to the H.J. Meyers & Co., Inc. (the "Underwriter") a warrant
to purchase up to 600,000 shares of Common Stock (the "Underwriter's
Warrant"). The price to be paid by the Underwriter for the Underwriter's
Warrant is $5.00.

(5) Such shares are being registered for resale by the Underwriter and its
assigns and transferees on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933.

(6) For purposes of calculation of the registration fee, each share of Common
Stock issuable upon exercise of the Underwriter's Warrant has been assumed
to have a proposed maximum offering price of $1.75 (140% of the average of
the high and low prices reported in the Nasdaq SmallCap Market on December
4, 1997).
- -------------------------------------------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

================================================================================
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED DECEMBER 8, 1997

[LOGO OF SOLOPOINT, INC.]

SOLOPOINT, INC.

6,000,000 SHARES
COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by SoloPoint,
Inc. ("SoloPoint" or the "Company"). The Company's Common Stock is traded on
the Nasdaq SmallCap Market under the symbol SLPT. On December 4, 1997, the last
reported sale price of the Common Stock on the Nasdaq SmallCap Market was $1.25
per share. See "Price Range of Common Stock."

THE SHARES OF STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SHOULD
BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. SEE "RISK FACTORS" BEGINNING ON PAGE 7.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
================================================================================
UNDERWRITING
PRICE DISCOUNTS AND, PROCEEDS TO
TO PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............. $ $ $
- -------------------------------------------------------------------------------
Total(3).............. $ $ $
================================================================================
</TABLE>

(1) Does not include additional compensation to be received by the H.J. Meyers
& Co., Inc. (the "Underwriter") in the form of (i) a non-accountable
expense allowance of $225,000 at an assumed public offering price of $1.25
per share (or $258,750 if the Underwriter's over-allotment option described
in footnote (3) is exercised in full) and, (ii) a warrant to purchase up to
600,000 shares of Common Stock at $1.75 per share (assuming a public
offering price of $1.25 per share), exercisable over a period of four
years, commencing one year from the date of this Prospectus (the
"Underwriter's Warrant"). In addition, the Company has agreed to indemnify
the Underwriter against certain civil liabilities under the Securities Act
of 1933. See "Underwriting."
(2) Before deducting expenses of the Offering payable by the Company, estimated
at $800,000, including the Underwriter's non-accountable expense allowance.

(3) The Company has granted the Underwriter an option, exercisable within 45
business days of the date of this Prospectus, to purchase up to 900,000
additional shares of Common Stock on the same terms and conditions set
forth above to cover over-allotments, if any. If all such additional shares
of Common Stock are purchased, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be increased to
$ , $ and $ , respectively. See "Underwriting."

The shares of Common Stock offered hereby will be offered on a "firm
commitment" basis by the Underwriter when, as and if delivered to and accepted
by the Underwriter and subject to prior sale, withdrawal or cancellation of the
offer without notice. It is expected that delivery of the certificates
representing the shares of Common Stock will be made at the office of H.J.
Meyers & Co., Inc., 1895 Mt. Hope Avenue, Rochester, New York 14620 on or about
1997.

H.J. MEYERS & CO., INC.

THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>

[GRAPHICS]

A color pictorial entitled "SoloPoint's Family of Personal Communications
Management Products." Six pictures are arranged in a circle displaying the
Company's products. Beginning with the far left picture, in a clockwise
direction are pictured, with accompanying titles, the Company's SmartMonitor
M-200, SmartMonitor M-100, Pacific Bell SmartScreen S-100-TMC, SmartScreen S-
150, SmartCenter C-120 and SmartScreen S-100.

The Company intends to furnish its shareholders with annual reports
containing audited financial statements certified by an independent public
accounting firm. Unaudited quarterly reports for the first three fiscal
quarters of each fiscal year are available through the SEC's EDGAR database or
from the Company upon request.

----------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITER MAY OVERALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>

SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and the financial statements and notes thereto appearing
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety. This Prospectus contains forward-looking statements
that involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under "Risk Factors" and
elsewhere in this Prospectus.

THE COMPANY

SoloPoint, Inc. ("SoloPoint" or the "Company") designs, develops and markets
innovative and easy-to-use personal communications management products that
connect people more effectively. The Company's products are used by residential
Regional Bell Operating Company ("RBOC") and Local Exchange Company ("LEC")
voice mail system ("Voice Mail") customers, Small Office Home Office ("SOHO")
professionals and professionals in corporate satellite offices. The Company's
products are designed to allow users to balance three essential needs of
communications dependent individuals: Mobility, the ability to receive critical
calls while away from their primary office; Accessibility, the ability to be
available on an as-needed basis; and Control, the ability to monitor calls in
order to decide, in real time, from whom and when to accept a call. The
Company's objective is to be a leading provider in the emerging personal
communications management products market.

In February 1997, the Company introduced the SmartScreen S-100, targeted at
residential RBOC and LEC Voice Mail customers. The S-100 is the only
commercially available product known to the Company that enables RBOC and LEC
Voice Mail users to screen incoming calls, connect to a caller leaving a Voice
Mail message and support a fax machine on the same telephone line. In addition,
the SmartScreen S-100 provides a Visual Message Waiting Indicator ("VMWI") to
indicate that there are new messages in Voice Mail. In May 1997, the Company
introduced SmartScreen S-150 targeted at SOHO professionals. The S-150
incorporates all the features of the S-100 and provides Caller ID information
on a connected personal computer ("PC"). International Data Corporation
estimates that there are over 9 million residential RBOC Voice Mail customers
in the United States as of year-end 1996, growing to over 18 million at the end
of 2001. The Company believes that the primary channels of distribution for the
SmartScreen product family are RBOCs and LECs. In May 1997, the Company entered
into a marketing agreement with Pacific Bell, an RBOC, to market a co-branded
version of the S-100 to Pacific Bell's residential Voice Mail customers.

In September 1996, the Company introduced the SmartMonitor M-100, targeted at
mobile SOHO professionals who use an answering machine. The M-100 is the only
commercially available product known to the Company that enables mobile
professionals to monitor and take office calls from their cellular or Personal
Communications Service ("PCS") phone, thereby minimizing "phone tag" and
increasing their effectiveness. In September 1997, the Company commenced first
commercial shipment of the SmartMonitor M-200 ("M-200"), targeted at mobile
SOHO professionals who use RBOC or LEC Voice Mail. The wireless market
(including cellular and PCS phones) is expected to grow from approximately 55
million users in 1997 to over 95 million in the year 2001 according to Bear
Stearns & Co. The Company believes the primary channel of distribution for the
M-100 is the network of retailers, dealers and distributors currently marketing
cellular and PCS phones and the primary channels of distribution for the M-200
are RBOCs and LECs. The M-200 is currently available for customer shipment. The
Company intends to pursue relationships with the wireless operations of RBOCs
and LECs to market the M-200.

3
<PAGE>

In March 1996, the Company introduced the SmartCenter C-100, the predecessor
to the SmartCenter C-120. The Smart Center C-120 was introduced in February
1997 as an enhanced version of the C-100. The C-120 is targeted at SOHO
professionals and professionals in corporate satellite offices that need to be
integrated into the corporate communications infrastructure. The C-120 is a
highly integrated, multifunction, personal call management solution that
includes a self-contained communications hardware device and SmartStart, a
graphical configuration and management software application that runs on the
Windows 95 operating system for PCs. The C-120 provides, among other features,
call routing, filtering and interactive menuing features, which allow the user
to choose an optimal balance between mobility, accessibility and control.
According to International Data Corporation, the number of SOHO professionals
who have home-offices grew from 36 million in 1994 to over 39 million in 1995.
The Company believes that the primary sales distribution channel for the C-120
targeted at SOHO professionals is office supply retailers. In November 1996,
the Company received an initial stocking order from Office Depot. The Company
believes that the primary sales channel for the C-120 targeted at professionals
in corporate satellite offices is direct from the Company or through Value
Added Resellers ("VARs"). Accordingly, the Company plans to spend a portion of
the proceeds of this offering to develop a direct corporate sales force and VAR
sales and support programs.

The Company was incorporated in California on March 26, 1993. Its
headquarters is located at 130-B Knowles Dr., Los Gatos, CA 95032, and its
telephone number is (408) 364-8850.

"SoloPoint" and "SoloCall" are trademarks of the Company. This Prospectus
also contains trademarks of other companies.

----------------

NOTICE TO CALIFORNIA AND OREGON INVESTORS

EACH PURCHASER OF SHARES OF COMMON STOCK IN CALIFORNIA AND OREGON MUST MEET
ONE OF THE FOLLOWING SUITABILITY STANDARDS: (i) A LIQUID NET WORTH (EXCLUDING
HOME, FURNISHINGS AND AUTOMOBILES) OF $250,000 OR MORE AND GROSS ANNUAL INCOME
DURING 1996 AND ESTIMATED DURING 1997, OF $65,000 OR MORE FROM ALL SOURCES; OR
(ii) A LIQUID NET WORTH (EXCLUDING HOME, FURNISHINGS AND AUTOMOBILES) OF
$500,000 OR MORE. EACH CALIFORNIA AND OREGON RESIDENT PURCHASING SHARES OF
COMMON STOCK OFFERED HEREBY WILL BE REQUIRED TO EXECUTE A REPRESENTATION THAT
IT COMES WITHIN ONE OF THE AFOREMENTIONED CATEGORIES.

4
<PAGE>

SUMMARY OF FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PERIOD FROM
MARCH 26,
YEAR ENDED NINE MONTHS ENDED 1993
DECEMBER 31, SEPTEMBER 30, (INCEPTION)
---------------- ----------------------- THROUGH
1995 1996 1996 1997 SEPTEMBER 30, 1997
------- ------- ----------- ----------- ------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ -- $ 380 $ 104 $ 367 $ 747
Operating loss......... (2,664) (3,671) (2,621) (3,198) (10,625)
Net loss............... (2,672) (3,594) (2,600) (3,156) (10,514)
Net loss per share(1).. $ (1.35) $ (1.46) $ (2.02) $ (0.90)
Shares used in
computing net loss per
share(1).............. 1,974 2,462 1,285 3,502
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------
AS
ACTUAL ADJUSTED(2)
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ 1,687 $ 7,693
Total assets........................................... 2,385 8,391
Deficit accumulated during the development stage....... (10,547) (10,547)
Shareholders' equity................................... 1,791 7,797
</TABLE>
- --------
(1) See Note 1 of Notes to Financial Statements for an explanation of the
determination of shares used in computing net loss per share.

(2) Adjusted to reflect the sale of the 6,000,000 shares of common stock
offered hereby at an assumed offering price of $1.25 per share and the use
of the estimated net proceeds therefrom. See "Use of Proceeds" and
"Capitalization."

5
<PAGE>

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the
Company......................... 6,000,000 Shares
Common Stock Outstanding Prior to
the Offering.................... 3,505,818 Shares
Common Stock Outstanding After
the Offering.................... 9,505,818 Shares
Use of Proceeds.................. Sales and marketing, research and
development, capital expenditures and working
capital and general corporate purposes. See
"Use of Proceeds."
Nasdaq SmallCap Symbol........... SLPT
</TABLE>

Except as otherwise specified, all information in this Prospectus assumes no
exercise of the Underwriter's over-allotment option, the Underwriter's Warrant,
other outstanding warrants or stock options outstanding or reserved for
issuance under the Company's incentive stock plan. See "Description of Capital
Stock--Warrants," and "Management--Benefit Plans."

6
<PAGE>

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, EACH PROSPECTIVE
INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS IN EVALUATING THE
COMPANY AND ITS BUSINESS BEFORE PURCHASING THE COMMON STOCK OFFERED HEREBY. NO
INVESTOR SHOULD PARTICIPATE IN THE OFFERING UNLESS SUCH INVESTOR CAN AFFORD A
COMPLETE LOSS OF HIS OR HER INVESTMENT. THIS PROSPECTUS CONTAINS FORWARD-
LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-
LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING BUT NOT LIMITED
TO THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS.

HISTORY OF OPERATING LOSSES; NO ASSURANCE OF FUTURE PROFITABILITY; FUTURE
CAPITAL NEEDS; NO ASSURANCE OF FUTURE FINANCING

The Company was incorporated in March 1993 and has incurred significant
operating losses in every fiscal period since inception. As of September 30,
1997, the Company had an accumulated deficit of $10,547,163. The Company
expects to incur substantial quarterly operating losses at least through the
end of 1998, and possibly longer. There can be no assurance that sales of the
Company's products will ever generate significant revenue, that the Company
will ever generate positive cash flow from its operations, or that the Company
will attain or thereafter sustain profitability in any future period. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

The net proceeds from this Offering are estimated to be $6,006,000, assuming
no exercise of the Underwriter's over-allotment option. In the absence of
receiving the proceeds of this Offering, the Company anticipates that its
existing capital resources and cash generated from operations, if any, will be
sufficient to meet the Company's cash requirements only through the end of
1997 at its anticipated level of operations. The Company's future capital
requirements will depend upon numerous factors, including the amount of
revenues generated from operations, the cost of the Company's sales and
marketing activities and the extent of the Company's research and development
activities, none of which can be predicted with certainty. The Company
anticipates that the proceeds of this Offering, together with existing capital
resources and cash generated from operations, if any, will be sufficient to
meet the Company's cash requirements through the end of 1998. However, the
Company may seek additional funding during the next 12 months and will likely
be required to seek additional funding after such time.

There can be no assurance that any additional financing will be available on
acceptable terms, or at all, when required by the Company. Moreover, if
additional financing is not available, the Company could be required to reduce
or suspend its operations, seek an acquisition partner or sell securities on
terms that may be highly dilutive or otherwise disadvantageous to investors
purchasing the shares of Common Stock offered hereby. The Company has
experienced in the past, and may continue to experience, operational
difficulties and delays in its product development and marketing activities
due to working capital constraints. Any such difficulties or delays could have
a materially adverse effect on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

RECENT PRODUCT INTRODUCTIONS; EMERGING MARKET; DEPENDENCE ON MARKET ACCEPTANCE
OF PRODUCTS; LACK OF ADEQUATE MARKETING RESOURCES

The Company has only recently introduced its current products and to date
the Company has received only limited revenue from the sale of these products.
The market for personal communications management products is only beginning
to emerge, and there can be no assurance that it will develop sufficiently to
enable the Company to achieve broad commercial acceptance of its products.
Because this market is relatively new and because current and future
competitors are likely to introduce a variety of competing products and
services, it is difficult to predict the rate at which this market will grow,
if at all, or the degree of market penetration which the Company will be able
to achieve, if any. To date, the market for personal communications management
products

7
<PAGE>

has developed at a significantly slower rate than the Company had originally
anticipated. If the personal communications management market fails to grow or
grows at a slower rate than the Company currently anticipates, or if the
Company fails to achieve sufficient market penetration, the Company's
business, financial condition and results of operations will be materially
adversely affected. Even if the market for personal communications management
products does grow, there can be no assurance that the Company's current
products or any future personal communications management products introduced
by the Company will achieve commercial acceptance within such a market.
Marketing newly introduced products such as those of the Company in a
developing market requires extensive financial resources and marketing
efforts. To date, the Company has not had sufficient financial resources to
adequately market its products and there can be no assurance that the proceeds
from this offering will be sufficient to enable the Company to adequately
market its products.

LACK OF SIGNIFICANT MARKETING, SALES AND DISTRIBUTION CAPABILITIES; RISKS
ASSOCIATED WITH STRATEGIC RELATIONSHIPS

Commercial acceptance of the Company's products will require the Company to,
among other things, successfully establish and maintain significant sales and
distribution channels and hire and retain key marketing and sales personnel.
The Company does not currently have sufficient sales and marketing personnel
to adequately support sales of its products, nor has the Company yet
established significant sales and distribution relationships with third
parties. There can be no assurance that the Company will be able to recruit
the required personnel or successfully establish and maintain significant
sales and distribution channels to market its products.

The Company believes that its future success, if any, will be largely
dependent on its ability to either sell its products to or enter into joint
marketing arrangements with RBOCs and LECs in the United States. In
particular, the Company believes that certain of its products can be sold
profitably only if they are sold to or in conjunction with RBOCs and LECs.
Selling a product to or entering into a marketing relationship with an RBOC or
LEC is generally a lengthy process. A failure by the Company to develop
significant relationships with RBOCs and LECs would have a materially adverse
effect on the Company's business and operating results. The Company has
entered into a marketing agreement with Pacific Bell which calls for Pacific
Bell to market a co-branded version of the Company's SmartScreen S-100
product. There can be no assurance that the marketing agreement with Pacific
Bell will be successful or that the Company will be able to establish
relationships with other RBOCs. Even if the Company is successful in
establishing alliances or relationships with RBOCs, LECs or other strategic
partners, there can be no assurance that such alliances or relationships will
result in an increase in the Company's distribution channels or product
revenues or otherwise provide any benefit to the Company. In addition, the
strategic partners may be in direct or indirect competition with the Company
or among each other. The presence of potential or actual conflicts of interest
could materially adversely affect the Company's relationships with potential
strategic partners, which in turn could have a material adverse effect on the
Company's business, financial condition and results of operations.

THIRD PARTY DISTRIBUTION RISKS

The Company intends to develop distribution channels for its products,
including certain authorized service resellers of RBOCs and LECs, retail
stores and mail order catalogs ("Distributors"). Development of any of these
channels will require the expenditure of substantial time and effort by the
Company's management. Based upon its experience to date, the Company believes
that certain Distributors may not be appropriate for certain of the Company's
products, and that the Company must identify and establish the appropriate
channels of distribution for each of its products or market such products
directly. There can be no assurance that the Company will be able to identify
and establish the appropriate channel of distribution for each of its products
or successfully market such products directly, and in the event that an
inappropriate channel is selected, the Company's business, financial condition
and results of operations will be adversely affected. See "Business-- Sales
and Marketing."

8
<PAGE>

The Company has limited experience in marketing its products through
Distributors and to date has not generated significant revenue from the sale
of its products through these channels. Additionally, certain Distributors may
have little or no experience offering personal communication management
products or may offer products that compete with the Company's personal
communications management products. Distributors may also give higher priority
to products of other suppliers, thus reducing their efforts to sell the
Company's personal communications management products, and agreements with
these Distributors may be terminable at the Distributors' option. There can be
no assurance that the Company will be able to establish relationships with
Distributors or, if established, that such relationships will be sustained.
The Company's inability to develop relationships with Distributors, or a
reduction in sales effort or termination of a Distributor's relationship with
the Company, if established, could have a material adverse effect on the
Company's business, financial condition and results of operations.

The use of Distributors also entails the risk that such Distributors will
accumulate inventories in anticipation of a growth in sales. If such growth
does not occur as anticipated, these Distributors may substantially decrease
the amount of product ordered in subsequent quarters or return previously
purchased product. The Company does not believe that a significant amount of
its products sold into these channels to date have sold through to end
customers and there can be no assurance that these products will sell through
to end customers in the future. The Company accepted in the third quarter of
1997 product returns from certain distributors and customers totaling
$134,069, which was approximately equal to new product revenues for the
quarter ended September 30, 1997. Future product returns or fluctuations in
orders could contribute to significant variations in the Company's business,
financial condition and results of operations.

Although the Company currently has no contractual obligation or plan to
reduce the prices of its products, there can be no assurance that the Company
will not choose or be required to reduce its prices in the future. If the
Company reduces its prices, the Company may, under certain circumstances,
credit its Distributors for the difference between the purchase prices of
products remaining in their inventory and the Company's reduced prices for
such products ("Price Protection"). There can be no assurance that actual
returns and price protection will not have a material adverse effect on the
Company's business, financial condition and results of operations,
particularly since the Company intends to introduce new and enhanced products
and is likely to face increasing price competition. The distribution industry
has been characterized by rapid change, including consolidations and financial
difficulties of Distributors, and the emergence of alternative distribution
channels. In addition, there are an increasing number of companies competing
for access to these channels. The loss or ineffectiveness of the Distributors
would have a material adverse effect on the Company's business, financial
condition and results of operations.

FUTURE REALIZATION OF INVENTORY

As a result of slower than anticipated sales growth and the shift in the
Company's distribution strategy, the Company's current level of inventory is
significantly higher than the current rate of usage or the expected rate of
usage of inventory during the next several quarters. If the Company is not
successful in establishing relationships with additional RBOCs and LECs or in
substantially increasing its sales volume and usage of existing inventory in
the near term, it may be required to write-down inventory carrying value by a
significant amount. The write-down of inventory carrying values, if
significant, would have a material adverse effect on the Company's business,
financial condition and results of operations.

POTENTIAL PRODUCT RETURNS AND WARRANTY CLAIMS

9
<PAGE>

certain distributors and customers totaling $134,069, which was approximately
equal to new product revenues for the quarter ended September 30, 1997. The
Company currently offers a 30-day unconditional money back guarantee on its
products as well as a limited two year warranty for SmartCenter and a limited
one year warranty for its other products. SmartCenter has only a limited sales
history and the Company's other two products, SmartMonitor and SmartScreen,
have less than a year's experience in the marketplace. Future warranty claims,
returns, stock rotation exchanges, or price protection adjustments could
exceed management's estimates and therefore could have a material adverse
effect on the Company's business, financial condition and results of
operations.

FLUCTUATIONS IN QUARTERLY RESULTS

The Company has experienced and expects to continue to experience
fluctuations in operating results. Fluctuations in operating results may
result in volatility in the price of the Company's common stock. Operating
results may fluctuate as a result of many factors, including the volume and
timing of orders received or product returns, if any, during the period, the
timing of commercial introduction of future products and enhancements,
competitive products and the impact of price competition on the Company's
average selling prices, product announcements by the Company and its
competition and the Company's level of research and development and sales and
marketing activities. Many of these factors are beyond the Company's control,
particularly those related to sales and product returns on behalf of the
Company's marketing partners and Distributors.

The Company's operating and other expenses are relatively fixed in the short
term. As a result, variations in timing of revenues, if any, will cause
significant variations in quarterly results of operations. Notwithstanding the
difficulty in forecasting future sales, the Company generally must undertake
its sales and marketing, research and development, and other commitments
months or years in advance. Accordingly, any shortfall in product revenues, in
a given quarter may materially adversely affect the Company's business,
financial condition and results of operations due to the inability to adjust
expenses during the quarter to match the level of product revenues, if any,
for the quarter. Once commitments for such expenditures are undertaken, the
Company may be unable to reduce them quickly if product revenues are less than
expected. In addition, the Company's sales expectations are based entirely on
its internal estimates of future demand. Due to these and other factors, the
Company believes that quarter to quarter comparisons of its results of
operations are not necessarily meaningful, and should not be relied upon as
indications of future performance.

DEPENDENCE ON LIMITED NUMBER OF CUSTOMERS

During the nine month period ended September 30, 1997, Hello Direct, Inc.
("Hello Direct") accounted for 23% of the Company's net revenues. The Company
expects that sales to relatively few customers will continue to account for a
significant percentage of the Company's revenues for the foreseeable future.
Substantially all of the Company's sales are made on a purchase order basis,
and none of the Company's customers has entered into an agreement requiring
them to purchase the Company's products. The loss of, or any reduction in
orders or returns of product from a current customer could have a material
adverse effect on the Company's business, financial condition and results of
operations in the near term.

The Company's ability to increase its sales will depend in part upon its
ability to obtain orders from new customers. In this regard, the Company
intends to expand its efforts to sell to RBOCs and LECs. The Company has had
only nominal sales to one RBOC to date and there can be no assurance of
significant sales to any RBOC or LEC in the future. In the event that such
sales do not materialize, the Company's business, financial condition and
results of operations would be materially adversely affected.

UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY RIGHTS; POTENTIAL PATENT
INFRINGEMENT

The Company relies upon a combination of patents, trademarks, copyrights,
trade secrets and non-disclosure agreements in order to establish and protect
its proprietary rights. The Company has filed applications for patents

10
<PAGE>

covering SmartCenter, and intends to continue to file applications, as
appropriate, for any of the Company's future products. There can be no
assurance that patents will issue from any of its pending applications or, if
patents do issue, that the claims allowed will be sufficiently broad to
protect the Company's technology. In addition, there can be no assurance that
any patents issued to the Company will not be challenged, invalidated or
circumvented, or that the right granted thereunder will provide proprietary
protection to the Company. Since United States patent applications are
maintained in secrecy until patents issue, and since the publication of
inventions in technical or patent literature tend to lag behind such
inventions by several months, the Company cannot be certain that it was the
first creator of inventions covered by its pending patent applications, that
it was the first to file patent applications for such inventions or that the
Company is not infringing on the patents of others.

The Company has in the past and intends in the future to trademark some of
its proprietary product names and logos and claims copyright protection for
its proprietary software. There can be no assurance that the Company can
obtain additional trademarks or that any copyright protection will be
adequate. Litigation may be necessary to enforce the Company's patents, if
issued, trademarks, copyrights or other intellectual property rights, to
protect the Company's trade secrets, to determine the validity and scope of
the proprietary rights of others or to defend against claims of infringement.
Such litigation could result in substantial costs and diversion of resources
and could have a material adverse effect on the Company's business, financial
condition and results of operations regardless of the final outcome of such
litigation. Despite the Company's efforts to safeguard and maintain its
proprietary rights, there can be no assurance that the Company will be
successful in doing so or that the Company's competitors will not
independently develop or patent technologies that are substantially equivalent
or superior to the Company's technologies. In addition, the laws of certain
foreign countries do not protect the Company's intellectual property rights to
the same extent, as do the laws of the United States. Although the Company
continues to implement protective measures and intends to defend its
proprietary rights vigorously, there can be no assurance that these efforts
will be successful. In the absence of effective protection of its intellectual
property, there can be no assurance that third parties will not develop and
market copies of the Company's products.

The Company may be involved from time to time in litigation to determine the
enforceability, scope and validity of any proprietary rights of the Company or
of third parties asserting infringement claims against the Company. Any such
litigation could result in substantial costs to the Company and diversion of
efforts by the Company's management and technical personnel. In particular,
the Company is in discussions with a manufacturer of computer telephony
products that has a patent covering the storage of a telephone number used in
a menuing system to allow a caller to redirect their call to another
destination. The manufacturer asserts that some of the Company's products
infringe upon this patent. The Company intends to challenge either the
validity of the patent or its application to the Company's products or enter
into a licensing agreement with the patent holder. There can be no assurance
that the Company will be able to challenge the patent successfully or if
necessary, enter into a licensing arrangement on commercially reasonable
terms. A failure of the Company to challenge the patent successfully or enter
into a licensing arrangement, would, in all probability, force the Company to
cease selling the affected products and would have a material adverse effect
on the Company's business, financial condition and results of operations.

The Company is aware that another manufacturer of computer telephony
products has filed a patent application purporting to cover any device which
electronically detects stutter dial tone signaling. The Company expects that
the patent will be issued and believes that the manufacturer may assert that
the Company's SmartMonitor M-200, SmartScreen S-100 and SmartScreen S-150
products infringe upon the patent. If the patent is issued and such assertion
is made, the Company intends to challenge either the validity of the patent or
its application to the Company's products or enter into a licensing agreement
with the patent holder. There can be no assurance that the Company will be
able to challenge the patent successfully or if necessary, enter into a
licensing arrangement on commercially reasonable terms. A failure of the
Company to challenge the patent successfully or enter into a licensing
arrangement, would, in all probability, force the Company to cease selling the
affected products and would have a material adverse effect on the Company's
business, financial condition

11
<PAGE>

and results of operations. In addition, the expense associated with a
successful challenge to the patent or a licensing arrangement could have a
materially adverse effect on the Company's business, financial condition and
results of operations. See "Business--Intellectual Property Rights."

DEPENDENCE ON BELLCORE SPECIFICATIONS

The Company has designed all of its personal communications management
products to comply with specifications published by Bell Communications
Research (the "Bellcore specifications"), which the Company believes are used
by most United States local telephone service providers. Due, however, to the
wide range of parameters contained within the Bellcore specifications, there
are potentially a large number of local switch configurations utilized by such
service providers. The Company has tested its products on only a limited
number of local switch configurations and has discovered that the SmartCenter
C-120, SmartMonitor M-200, SmartScreen S-100 and SmartScreen S-150 products
are not currently compatible with GTE Voice Mail, a service provider that is
heavily used in Los Angeles and the Saratoga/Los Gatos area of Northern
California. The Company believes that GTE is currently attempting to address
this problem, however, there can be no assurance that these products or any of
the Company's future personal communications management products will work in
conjunction with existing or future switch configurations, or that local
service providers have configured their switches to fully conform to the
Bellcore specifications. The failure of its current products or any of the
Company's future personal communications management products to work in
conjunction with existing or future switch configurations could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Since the Bellcore specifications are not predominantly used by service
providers outside the United States, the Company may have difficulty in
selling or may be unable to sell its products to markets in foreign countries.
While the Company intends to develop future personal communications management
products to address foreign markets, there can be no assurance that the
Company will be successful in its development efforts, or that any developed
personal communications management products will function effectively, if at
all, in any foreign markets.

PRODUCT DEFECTS

Products such as those currently offered by the Company frequently contain
undetected software or hardware errors when introduced or as new versions are
released. The Company has experienced such errors in the past as the Company
has performed alpha and beta testing on products in development. In addition,
the Company has experienced a product recall of its SmartCenter product in the
past. Although the Company is not presently aware of such an error which would
materially and adversely affect product performance, there can be no assurance
that these products and any of the Company's future personal communications
management products will not experience errors in the future. From time to
time, the Company may temporarily suspend, delay or recall shipments or divert
development resources from other projects to correct a particular product
deficiency. Such efforts to identify and correct errors and make design
changes may be expensive and time consuming. Failure to discover product
defects in the future could result in delayed product introductions or
shipments, the recall of previously shipped products, increased service and
warranty costs, design modifications, unfavorable publicity, or strained
relationships with Distributors and strategic partners, any of which could
have material adverse effect on the Company's business, financial condition
and results of operations. See "Business--Research and Development."

COMPETITION

12
<PAGE>

that provide communications management services, such as Priority Call
Management, Inc., Wildfire Communications, AccessLine Technologies, Inc., MCI
Communications Corporation and RBOCs such as Ameritech Corporation
("Ameritech") and U.S. West; (ii) companies that directly provide personal
communications management products, such as Bogen Communications, Inc., Beond
Communications, Centrepoint s/w Technologies, Inc., CIDCO, Inc., Jetstream
Communications and Notify Corporation; and (iii) large consumer electronics
companies that offer telephony products, such as enhanced answering machines,
including AT&T Corporation, Sony Corporation, Panasonic Company and others.
The Company believes that there will be intense competition between companies
that provide communications management services, such as RBOCs, and companies
that directly provide communications management products. Most of the
Company's present and potential competitors have substantially greater
financial, marketing, technical and other resources than the Company.
Furthermore, the Company also expects to compete with companies that have
substantial manufacturing, marketing and distribution capabilities, areas in
which the Company has limited or no experience. Increased competition, direct
and indirect, could materially adversely affect the Company's revenues and
profitability through pricing pressure and loss of market share. There can be
no assurance that the Company will be able to compete successfully against
existing and new competitors as the market evolves, and the level of
competition increases. The failure to compete successfully against existing
and new competitors would have a material adverse effect upon the Company's
business, financial condition and results of operations. See "Business--
Competition."

Current and potential competitors have established and may establish
additional cooperative relationships with third parties to market and sell
their products and to increase the ability of their products to address the
needs of the Company's prospective customers. To the extent such third parties
enter into relationships with competitors of the Company, it is likely such
third parties would be unable or unwilling to enter into similar relationships
with the Company. It is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. As a
result, such competitors may be able to respond more quickly to new or
emerging technologies and to changes in customer requirements or to devote
greater resources to the development, promotion and sales of their products
than can the Company. There can be no assurance that these competitive
pressures will not materially adversely affect the Company's business,
financial condition and results of operations.

TELECOMMUNICATIONS ACT OF 1996

RBOCs heretofore have been prohibited from manufacturing telecommunications
and customer premise equipment due to concerns relating to the potential for
discrimination by monopoly providers of local exchange service. The
Telecommunications Act of 1996 (the "Act") allows an RBOC to engage in
equipment manufacturing and close collaboration with manufacturers during the
design and development of hardware and software when the Federal
Communications Commission ("FCC") has verified that a parent RBOC, and each
RBOC within the parent company's region, is in compliance with the access and
interconnection requirements set forth in the Act.

This change in law permits RBOCs that provide communications management
services, such as U.S. West, to compete with the Company in the design and
manufacture of communication products. There can be no assurance that the
Company will be able to compete successfully with RBOCs in the personal
communications management market, and failure to do so would have a material
adverse effect upon the Company's business, financial condition and results of
operations.

RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON PRODUCT DEVELOPMENT

The market in which the Company competes is characterized by rapidly
changing technology, frequent new product introductions, evolving industry
standards and short product life cycles. Accordingly, the Company's success
will be substantially dependent upon a number of factors, including its
ability to identify and conform to emerging standards in the communications
industry, differentiate its products from those of its competitors, achieve
superior or competitive performance in its products, reduce manufacturing
costs and quickly bring

13
<PAGE>

products to market. Further, short product life cycles are expected to expose
its current products and inventories and any of the Company's future products
to the risk of obsolescence, and therefore may require the Company to
frequently introduce competitive new and enhanced products. If the Company is
unable to develop or obtain access to advanced communications technologies as
they become available or is unable to design, develop, contract for the
manufacture of and introduce competitive new and enhanced products on a timely
basis, its business, financial condition and results of operations would be
materially adversely affected.

RELIANCE ON SOLE SOURCE CONTRACT MANUFACTURERS AND COMPONENT SUPPLIERS

The Company subcontracts the manufacture of all of the subassemblies of the
SmartCenter and SmartMonitor families on a sole source basis to AC
International, Inc. (for circuit board fabrication) and Wellex Corporation
(for circuit board assembly). The Company subcontracts the manufacturing of
all of the subassemblies of the SmartScreen product family on a sole source
basis to CT Continental. The Company believes that there are alternative
contract manufacturers which could produce such subassemblies, but it is not
currently pursuing agreements or understandings with such alternative sources.
Sole source integrated circuit suppliers include but are not limited to
Motorola, Inc., Zilog Corporation, Texas Instruments, National Semiconductor
Corporation, Exar Corporation and DSP Technology, Inc. There can be no
assurance that such contract manufacturers or sole source integrated circuit
suppliers will be able to supply the Company with sufficient quantities of
subassemblies or components in a timely manner. If a contract manufacturer or
sole source supplier were unable to assemble or deliver the Company's
subassemblies or components in a timely manner, for any reason, the Company's
business, financial condition and results of operations would be materially
adversely affected. In the event of a reduction or interruption of supply to
the Company of such subassemblies or components, it could take a significant
period of time for the Company to qualify alternative suppliers, redesign the
product as necessary and commence manufacturing. The Company's inability to
obtain sufficient quantities of subassemblies or sole or limited source
components in the future or to develop alternative sources in the future,
could result in delays in product introductions or shipments, which could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Manufacturing."

DEPENDENCE ON LIMITED NUMBER OF KEY PERSONNEL

The Company's future success depends substantially upon the efforts of
certain of its executive officers and key technical and other employees, many
of whom have only recently joined the Company and none of whom are covered by
key man life insurance. Edward M. Esber, Jr. joined the Company in October
1995 as President, Chief Executive Officer and Director. Arthur G. Chang
joined the Company in February 1996 as Chief Operating Officer and Vice
President of Research and Development. Ronald J. Tchorzewski joined the
Company in October 1996 as Vice President of Finance and was elected Chief
Financial Officer in July 1997. Don Nanneman, Vice President of Marketing,
joined the Company in January 1997. The Company's former Vice President of
Sales resigned effective as of August 31, 1997. The Company is currently
seeking to hire a full time Vice President of Sales.

The Company's ability to successfully market and distribute its current
products and any future personal communications management products will
require it to attract, retain and motivate additional key employees, including
product support, research and development, and sales and marketing personnel.
There can be no assurance that the Company will be successful in achieving any
of these goals, and the failure to do so would have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Management" and "Business--Personnel."

RISKS ASSOCIATED WITH MANAGING GROWTH

The Company's anticipated level of growth, should it occur, will challenge
the Company's management and its sales and marketing, customer support,
research and development and finance and administrative operations. The
Company's future performance will depend in part on its ability to manage any
such growth,

14
<PAGE>

should it occur, and to adapt its operational and financial control systems,
if necessary, to respond to changes resulting from any such growth. There can
be no assurance that the Company will be able to successfully manage any
future growth or to adapt its systems to manage such growth, if any, and its
failure to do so would have a material adverse effect on the Company's
business, financial condition and results of operations.

SHARES ELIGIBLE FOR FUTURE SALE

Sale of substantial amounts of the Company's Common stock in the public
market or the prospect of such sales could materially adversely affect the
market price of the Common Stock. Upon completion of this Offering, the
Company will have outstanding 9,505,818 shares of Common Stock, assuming no
exercise of the Underwriter's over-allotment option and no exercise of
outstanding options or warrants. Of these shares, 2,138,461 shares are
restricted shares ("Restricted Shares") under the Securities Act of 1933, as
amended (the "Securities Act"). The 6,000,000 shares offered hereby, along
with the 1,350,000 shares of Common Stock sold in the Company's initial public
offering, will be immediately eligible for sale in the public market without
restriction on the closing of this Offering. An additional 591,441 shares are
eligible for sale in the public market following the closing of this Offering
subject in certain cases to certain volume and other resale restrictions under
Rule 144. Of the Restricted Shares, 1,541,372 shares are subject to lockup
agreements expiring on August 6, 1998, under which the holders of such shares
have agreed not to sell or otherwise dispose of any of their shares without
the prior written consent of the Underwriter. The Underwriter may release some
or all of the shares from the lockup at its discretion from time to time
without notice to the public. Additionally, the Underwriter's Warrant may be
exercised at any time during the four year period beginning 12 months after
the closing of this Offering in which case up to 600,000 shares of Common
Stock would be eligible for sale in the public markets. The Company has filed
registration statements on Form S-8 under the Securities Act covering 775,170
shares of Common Stock reserved for issuance under the Company's Amended and
Restated 1993 Incentive Stock Plan. Shares of Common Stock issued upon
exercise of options under such registration statements will be available for
sale in the public market, subject in some cases to volume and other
limitations, including the Lockup Agreements referred to above. Sales in the
public market of substantial amounts of Common Stock (including sales in
connection with an exercise of certain registration rights by one or more
holders of approximately 1,434,319 shares of Common Stock) or the perception
that such sales could occur could depress prevailing market prices for the
Common Stock. See "Management--Benefit Plans," "Shares Eligible for Future
Sale," "Underwriting" and "Description of Capital Stock--Registration Rights."

VOLATILITY OF STOCK PRICE

The trading price of the Company's Common Stock has been subject and may
continue to be subject to wide fluctuations in response to quarterly
variations in operating results, failure by the Company to meet analysts'
expectations with respect to operating results, announcements of technological
innovations or new products by the Company or its competitors, changes in
financial estimates by securities analysts, new strategic or distribution
relationships, the operating and stock price performance of other companies
that investors deem comparable to the Company and other events or factors. In
addition, the stock market in general and the market prices for small
technology companies in particular, have experienced extreme volatility that
often has been unrelated to the operating performance of such companies. These
broad market and industry fluctuations may adversely affect the trading price
of the Company's Common Stock, regardless of the Company's operating
performance.

DELISTING OF SECURITIES FROM THE NASDAQ MARKET; LIMITED LIQUIDITY OF TRADING
MARKET; POSSIBLE INABILITY OF UNDERWRITER TO MAKE A MARKET IN THE COMPANY'S
COMMON STOCK

Shares of the Company's Common Stock are quoted on the Nasdaq SmallCap
Market. The Nasdaq Small- Cap Market is a significantly less liquid market
than the Nasdaq National Market. If the Company should continue to experience
losses from operations, it may be unable to maintain the standards for
continued quotation on the Nasdaq SmallCap Market. Trading, if any, in the
Common Stock would therefore be conducted in the over-the-counter market on an
electronic bulletin board established for securities that do not meet the
Nasdaq

15
<PAGE>

SmallCap Market listing requirements, or in what are commonly referred to as
the "pink sheets." As a result, an investor would find it more difficult to
dispose of, or to obtain accurate quotations of the price of, the Company's
Common Stock. Nasdaq has recently promulgated new rules which make continued
listing of companies on the Nasdaq SmallCap Market more difficult and has
significantly increased its enforcement efforts with regard to the Nasdaq
standards for such listing. In addition, if the Company's Common Stock were
removed from the Nasdaq SmallCap Market, the Company's Common Stock would be
subject to so-called "penny stock" rules that impose additional sales practice
and market making requirements on broker-dealers who sell and/or make a market
in such securities. Consequently, removal from the Nasdaq SmallCap Market, if
it were to occur, could affect the ability or willingness of broker-dealers to
sell and/or make a market in the Company's Common Stock and the ability of
purchasers of the Company's Common Stock to sell their securities in the
secondary market. In addition, because the market price of the Company's
Common stock is less than $5.00 per share, the Company may become subject to
certain penny stock rules even if still quoted on the Nasdaq SmallCap Market.
Such rules may further limit the market liquidity of the Common Stock and the
ability of purchasers in this Offering to sell such Common Stock in the
secondary market.

Any limitation on the ability of the Underwriter to make a market in the
Company's Common Stock could adversely effect the liquidity or trading price
of the Company's Common Stock, which could have a material adverse effect on
the market price of the Company's Common Stock. The Company believes that the
Chicago office of the Securities and Exchange Commission is conducting a
private, nonpublic investigation of H.J. Meyers & Co., Inc., the Underwriter
and the principal market maker in the Company's Common Stock, pursuant to a
Formal Order of Investigation issued by the Commission as to whether the
Underwriter may have violated applicable securities laws and the rules and
regulations thereunder, with respect to sales of certain securities. The
Company is currently unable to assess the potential impact of the outcome of
the Staff's investigation on the Underwriters ability to make a market in the
Company's Common Stock or this Offering.

On July 16, 1996, the National Association of Securities Dealers, Inc.
("NASD") issued a notice of Acceptance, Waiver and Consent (the "AWC") whereby
the Underwriter was censured and ordered to pay fines and restitution to
retail customers in the amount of $250,000 and approximately $1.025 million,
respectively. The AWC was issued in connection with claims by the NASD that
the Underwriter charged excessive markups and markdowns in connection with the
trading of four certain securities originally underwritten by the Underwriter;
the activities in question occurred during periods between December 1990 and
October 1993. The Underwriter has informed the Company that the fines and
refunds will not have a material adverse effect on the Underwriter's
operations and that the Underwriter has effected remedial measures to help
ensure that the subject conduct does not recur.

IMMEDIATE AND SUBSTANTIAL DILUTION

Based upon an assumed offering price of $1.25 per share, Purchasers of the
shares of Common Stock offered hereby will incur an immediate and substantial
dilution of $0.43 per share or approximately 34% of their investment in the
shares of Common Stock in that the net tangible book value of the Company's
Common Stock after this Offering will be approximately $0.82 per share. See
"Dilution."

NO ANTICIPATED DIVIDENDS

The Company has not previously paid any dividends on its Common Stock, and
for the foreseeable future intends to continue its policy of retaining
earnings, if any, to finance the development and expansion of its business.
The Company's ability to pay dividends is currently restricted pursuant to a
loan agreement. See "Dividend Policy."

16
<PAGE>

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS

As permitted by California General Corporation Law, the Company has included
in its Amended and Restated Articles of Incorporation a provision to eliminate
the personal liability of its directors for monetary damages for breach or
alleged breach of their fiduciary duties as directors, subject to certain
exceptions. In addition, the Bylaws of the Company provide that the Company is
required to indemnify its officers and directors under certain circumstances,
including those circumstances in which indemnification would otherwise be
discretionary and the Company is required to advance expenses to its officers
and directors as incurred in connection with proceedings against them for
which they may be indemnified. The Company has entered into indemnification
agreements with its officers and directors containing provisions that are in
some respects broader than the specific indemnification provisions contained
in the California General Corporation Law. See "Management--Limitations on
Liability and Indemnification Matters."

ISSUANCE OF PREFERRED STOCK MAY ADVERSELY AFFECT HOLDERS OF COMMON STOCK

The Board of Directors has the authority to issue up to 5,000,000 shares of
undesignated Preferred Stock and to determine the rights, preferences,
privileges and restrictions of such shares without any further vote or action
by the shareholders. Although at present the Company has no plans to issue any
of the Preferred Stock, the Preferred Stock could be issued with voting,
liquidation, dividend and other rights superior to the rights of the Common
Stock. The voting power of the officers and directors or the issuance of
Preferred Stock under certain circumstances could have the effect of delaying
or preventing a change in control of the Company. See "Description of Capital
Stock."

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements may be deemed to include
the Company's plans to create a line of personal communications management
products, establish strategic alliances and business relationships, implement
a multichannel distribution strategy, expend resources to create end-user
demand and brand name recognition and file additional patent applications.
Such forward-looking statements may also be deemed to include the Company's
expectations concerning factors affecting the market for its current products
and any future personal communications management products it may develop,
including growth in the personal communications management product
marketplace, the dependence of mobile individuals on the ability to manage
business communications effectively in a mobile environment and the
shortcomings of commercially available personal communications management
products. Such forward-looking statements also may include the Company's
planned uses of the proceeds of this Offering. Actual results could differ
from those projected in any forward-looking statements for the reasons
detailed in the other sections of this "Risk Factors" portion of the
Prospectus. The forward-looking statements are made as of the date of this
Prospectus and the Company assumes no obligation to update the forward-looking
statements, or to update the reasons why actual results could differ from
those projected in the forward-looking statements.

17
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 6,000,000 shares being
offered hereby, after deducting underwriting discounts and commissions and
offering expenses, are estimated to be approximately $6,006,000 based upon an
assumed public offering price of $1.25 per share. The Company expects to use
the net proceeds from this offering approximately as follows:

<TABLE>
<CAPTION>
AMOUNT PERCENT
---------- -------
<S> <C> <C>
Sales and marketing(1)....................................... $3,003,000 50%
Research and development(2).................................. 1,502,000 25
Capital expenditures......................................... 180,000 3
Working capital and general corporate purposes(3)............ 1,321,000 22
---------- ---
TOTAL........................................................ $6,006,000 100%
========== ===
</TABLE>
- --------
(1) See "Business--Sales and Marketing."
(2) See "Business--Research and Development."
(3) Funds are to be used for working capital and general corporate purposes,
including salaries, office expenses and other general overhead costs.

The projected expenditures described above are estimates and approximations
only and do not represent firm commitments by the Company. Proceeds allocated
to working capital and general corporate purposes may be utilized for
acquisitions of or investments in complementary technologies or businesses.
The Company currently plans no such acquisitions or investments. Pending such
uses, the net proceeds will be invested in short-term, interest-bearing,
investment-grade securities.

The Company believes that the net proceeds from this Offering, together with
its existing cash resources, and revenues from operations, if any, will be
adequate to satisfy its working capital requirements through 1998. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock.
The Company currently anticipates that it will retain earnings for the
expansion and operation of its business and does not anticipate paying cash
dividends on its Common Stock in the foreseeable future. The Company's ability
to pay dividends is currently restricted pursuant to a loan agreement with
Venture Lending and Leasing, Inc.

18
<PAGE>

CAPITALIZATION

The following table sets forth the short-term debt and capitalization of the
Company (i) as of September 30, 1997 and (ii) as adjusted to reflect the sale
by the Company of 6,000,000 shares offered hereby at an assumed public
offering price of $1.25 per share, less applicable underwriting discounts and
commissions and net of expenses:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------
ACTUAL AS ADJUSTED(1)
------- --------------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Notes payable, current portion......................... $ 28 $ 28
======= =======
Notes payable, non-current portion..................... $ 120 $ 120
Shareholders' equity:
Preferred Stock, no par value:
5,000,000 shares authorized; no shares issued and
outstanding, actual and as adjusted................. -- --
Common Stock, no par value:
35,000,000 authorized; 3,505,818 shares issued and
outstanding, actual; 9,505,818 shares issued and
outstanding, as adjusted............................ 12,424 18,430
Deficit accumulated during the development stage...... (10,547) (10,547)
Notes receivable from shareholders.................... (86) (86)
------- -------
Total shareholders' equity........................... 1,791 7,797
------- -------
Total capitalization................................ $ 1,911 $ 7,917
======= =======
</TABLE>
- --------

(1) Does not include: (i) options outstanding as of September 30, 1997 to
purchase 298,838 shares of Common Stock at a weighted average exercise
price of $2.46 per share under the Company's 1993 Incentive Stock Plan
(the "Stock Plan"); (ii) warrants outstanding as of September 30, 1997 to
purchase 454,240 shares of Common Stock at a weighted average exercise
price of $5.27 per share; (iii) the Underwriter's over-allotment option to
purchase up to 900,000 shares of Common Stock; (iv) a warrant to purchase
up to 600,000 shares of Common Stock at an exercise price of $1.75 per
share (assuming a public offering price of $1.25 per share) to be issued
to the Underwriter upon the closing of this Offering; and (v) options
granted in October 1997 to purchase 4,750 shares of Common Stock at a
weighted average exercise price of $2.14 per share under the Company's
Stock Plan.

19
<PAGE>

DILUTION

As of September 30, 1997, the Company had a net tangible book value of
approximately $1,791,000 or $0.51 per share of Common Stock. "Net tangible
book value" represents the total tangible assets less total liabilities
divided by the number of shares of Common Stock outstanding. After giving
effect to the receipt by the Company of the net proceeds from the sale of the
6,000,000 shares of Common Stock offered hereby at an assumed public offering
price of $1.25 per share, the adjusted net tangible book value of the Company
as of September 30, 1997 would have been approximately $7,797,000 or, $0.82
per share. This represents an immediate increase in net tangible book value of
$0.31 per share to existing shareholders and an immediate dilution of $0.43
per share to new investors. The following table illustrates this per share
dilution:

<TABLE>
<S> <C> <C>
Assumed public offering price per share........................ $1.25
Net tangible book value per share before the Offering........ $.51
Increase per share attributable to new investors............. .31
----
Net tangible book value per share after the Offering........... 0.82
-----
Dilution per share to new investors*......................... $0.43
=====
</TABLE>
- --------

* Represents dilution of approximately 34% to purchasers of the shares of
Common Stock offered hereby.

The following table summarizes as of September 30, 1997, the differences
between existing shareholders and purchasers of shares in the offering with
respect to the number of shares of Common Stock purchased from the Company,
the total consideration paid and the average price per share paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders........... 3,505,818 36.9% $12,423,836 62.4% $3.54
New investors................... 6,000,000 63.1% 7,500,000 37.6% $1.25
--------- ----- ----------- -----
Total......................... 9,505,818 100.0% $19,923,836 100.0%
========= ===== =========== =====
</TABLE>
- --------

MARKET FOR COMMON STOCK

The Company's Common Stock is traded on the Nasdaq SmallCap Market under the
symbol SLPT. Subsequent to the Company's initial public offering on August 6,
1996, the following high and low closing prices were reported by Nasdaq each
quarter:

<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Quarter ended September 30, 1996 (subsequent to August 6,
1996)....................................................... $5.34 $2.61
Quarter ended December 31, 1996.............................. 3.50 1.75
Quarter ended March 31, 1997................................. 3.38 1.75
Quarter ended June 30, 1997.................................. 3.50 1.63
Quarter ended September 30, 1997............................. 3.81 1.88
Quarter ended December 31, 1997 (as of December 4, 1997)..... 2.56 1.19
</TABLE>

At September 30, 1997, the Company had approximately 108 shareholders of
record of its Common Stock.

20
<PAGE>

SELECTED FINANCIAL DATA

The following selected statement of operations data, for the years ended
December 31, 1995 and 1996 and the period from March 26, 1993 (inception)
through December 31, 1996 and the balance sheet data at December 31, 1995 and
1996 are derived from financial statements of the Company included elsewhere
in this Prospectus, which have been audited by Ernst & Young LLP, independent
auditors', as indicated in their report included elsewhere in this Prospectus,
and are qualified by reference to such financial statements including the
related notes thereto. The selected statements of operations data for the nine
month periods ended September 30, 1996 and 1997 and the balance sheet data at
September 30, 1997 have been derived from unaudited interim condensed
financial statements of the Company contained elsewhere herein and reflect in
management's opinion, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of financial position and
results of operations for these periods. Results of operations for the nine
months ended September 30, 1997 are not necessarily indicative of results to
be expected for the year ending December 31, 1997. The selected financial data
set forth below should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
financial statements, notes thereto and the independent auditors' report
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PERIOD FROM
MARCH 26,
FISCAL YEAR NINE MONTHS 1993
ENDED DECEMBER ENDED (INCEPTION)
31, SEPTEMBER 30, THROUGH
---------------- ------------------------- DECEMBER 31,
1995 1996 1996 1997 1996
------- ------- ----------- ------------- ------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues............ $ -- $ 380 $ 104 $ 367 $ 380
Cost of sales........... -- 289 86 263 289
------- ------- ------- ------- -------
Gross margin............ 91 18 104 91
Costs and expenses:
Research and
development........... 1,386 1,524 1,112 1,083 3,354
Sales and marketing.... 501 1,120 727 1,392 1,622
General and
administrative........ 777 1,118 800 827 2,542
------- ------- ------- ------- -------
Total operating
expenses............... 2,664 3,762 2,639 3,302 7,518
------- ------- ------- ------- -------
Operating loss.......... (2,664) 3,671 (2,621) (3,198) (7,427)
Other income (expense).. (8) 77 21 42 69
------- ------- ------- ------- -------
Net loss................ $(2,672) $(3,594) $(2,600) $(3,156) $(7,358)
======= ======= ======= ======= =======
Net loss per share...... $ (1.35) $ (1.46) $ (2.02) $ (0.90)
======= ======= ======= =======
Shares used in computing
net loss per share..... 1,974 2,462 1,285 3,502
<CAPTION>
DECEMBER 31,
---------------- SEPTEMBER 30,
1995 1996 1997
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficit).............. $(1,118) $ 4,788 $ 1,687
Total assets............ 938 5,483 2,385
Long-term portion of
notes payable.......... 91 140 120
Redeemable convertible
preferred stock........ 2,799 -- --
Shareholders' equity
(net capital
deficiency)............ (3,769) 4,861 1,791
</TABLE>

21
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following section contains forward-looking statements that involve risks
and uncertainties, including those referring to the period of time the
Company's existing capital resources will meet the Company's future capital
needs, the Company's future operating results, the market acceptance of the
products of the Company, the Company's efforts to establish and maintain
distribution partners, the development of new products, and the Company's
planned investment in the marketing and distribution of its current products
and research and development with regard to future products. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including:
dependence on market acceptance of multifunction personal communications
management products; lack of significant sales and distribution channels; the
Company's ability to timely develop new products; business conditions and
growth in the personal communications management industry and general economy;
competitive factors, such as rival providers of personal communications
management products and services and price pressures; compatibility with a
wide variety of switching configurations; reliance on sole source contract
manufacturers and component suppliers; dependence on a limited number of key
personnel; rapid technological changes; as well as other factors set forth
elsewhere in this Prospectus.

OVERVIEW

The Company was incorporated on March 26, 1993. As of September 30, 1997,
the Company was still in the development stage. Since inception, the Company's
focus has been on the design and development of personal communications
management solutions for communications-dependent individuals. The Company
introduced the SmartCenter C-100, the predecessor of the SmartCenter C-120, in
March 1996. The SmartCenter C-120 was introduced in February 1997, as an
enhanced version of the C-100. The Company introduced the SmartMonitor M-100
in September 1996, SmartScreen S-100 in February 1997, SmartScreen S-150 in
May 1997 and commenced first commercial shipment of SmartMonitor M-200 in
September 1997. The Company's products are used by residential RBOC and LEC
Voice Mail customers, SOHO professionals and professionals in corporate
satellite offices.

To date, the Company's working capital requirements have been met through
the sale of equity and debt securities and minimal revenues from product
sales. The Company has sustained significant operating losses in every fiscal
period since inception and expects to incur substantial quarterly operating
losses at least through the end of calendar year 1998 and possibly longer. In
order to transition from a development stage company, the Company must achieve
commercial acceptance of its products and generate material product revenues
with sufficient gross margins to cover the Company's operating expenses.
Commercial acceptance will require the Company to, among other things,
successfully establish significant sales and distribution channels and hire
and retain key marketing and sales personnel. See "--Liquidity and Capital
Resources."

The Company's products currently have a 30-day, unconditional, money-back
guarantee. Revenue is recognized 30 days after the date that products are
shipped. Allowances are provided for product returns based on estimated future
product returns, the timing of expected new product introductions and other
factors. These allowances are recorded as direct reductions of revenue and
accounts receivable.

The Company establishes allowances, including allowances for stock balancing
and product rotation, based upon estimated future returns of product and after
taking into account channel inventory levels, the timing of new product
introductions and other factors. While the Company maintains measures to
monitor these factors and to provide appropriate allowances, actual product
returns may differ from the Company's reserve estimates and such differences
could be material. The Company accepted in the third quarter of 1997 product
returns from certain distributors and customers totaling $134,069, which was
approximately equal to new product revenues for the quarter ended September
30, 1997. In addition, the Company currently offers a 30-day unconditional
money back guarantee as well as a limited two-year warranty on SmartCenter and
a limited one-year warranty for its other products. SmartCenter has only a
limited sales history and the Company's other two products,

22
<PAGE>

SmartMonitor and SmartScreen, have less than a year's experience in the
marketplace. Future warranty claims, returns, stock rotation exchanges, or
price protection adjustments could exceed management's estimates and
accordingly could have a material adverse effect on the Company's business,
financial condition and results of operations.

RESULTS OF OPERATIONS

Net Revenues

Net revenues for the year ended December 31, 1996, were $380,113. Two
customers accounted for 56% and 19% of 1996 net revenues. The Company received
no revenues during the year ended December 31, 1995. The increase in net
revenues in 1996 was mainly attributable to shipment of the Company's first
product, SmartCenter. Net revenues for the nine month period ended September
30, 1997 were $366,566 compared to $103,910 for the nine month period ended
September 30, 1996. The increase in net revenues for the nine month period
ended September 30, 1997 was primarily due to revenues generated from sales of
the Company's SmartCenter, SmartMonitor and SmartScreen products which were in
distribution during the first nine months of 1997 as compared to only the
Company's SmartCenter product being sold during the same period of 1996. Hello
Direct accounted for 23% of net revenues for the nine month period ended
September 30, 1997. The Company accepted in the third quarter of 1997 product
returns from certain distributors and customers totaling $134,069. The amount
of returns for the quarter was nearly equal to new product revenues for the
quarter ended September 30, 1997 and as such the Company recorded net revenues
totaling $3,719 for the period.

Gross Margin

Cost of sales for the year ended December 31, 1996 was $289,050, while no
goods were sold during the year ended December 31, 1995. The low gross margin
for the year ended December 31, 1996 was primarily due to discounted or free
units offered to customers and prospective customers in order to open new
distribution channels as well as costs associated with the initiation of
manufacturing and low production volume. Cost of sales for the nine month
period ended September 30, 1997 was $262,911 compared to $85,884 for the nine
month period ended September 30, 1996. Gross margin for the year ended
December 31, 1996 was 24%. Gross margin for the nine month period ended
September 30, 1997 was 28% compared to 17% for the nine month period ended
September 30, 1996. Although gross margin for the nine month period ended
September 30, 1997 was positively impacted by product mix due to the higher
margins on the Company's SmartScreen and SmartMonitor products, overall gross
margin remained low due to costs associated with the commencement of
manufacturing of these products and low production volume.

Operating Expenses

Research and Development. Research and development expenses were $1,523,599
for the year ended December 31, 1996 as compared to $1,385,769 for the year
ended December 31, 1995. This increase of 10% resulted principally from higher
average headcount for the twelve months ended December 31, 1996 relative to
the prior year and increased engineering expenses incurred for prototypes and
tooling for products under development. Research and development expenses for
the nine month period ended September 30, 1997 were $1,082,656 as compared to
$1,111,844 for the nine month period ended September 30, 1996. The Company
anticipates that research and development expenses may increase slightly in
the foreseeable future should the Company expand its existing product line.

Sales and Marketing. Sales and marketing expenses were $1,120,400 for the
year ended December 31, 1996 as compared to $501,580 for the year ended
December 31, 1995. This increase of 123% was primarily due to increased
expenses related to the marketing and the launch of the Company's first
product, SmartCenter, in March 1996 as well as the introduction of its second
product, SmartMonitor S-100, at the end of September 1996. Sales and marketing
expenses increased 91% during the nine month period ended September 30, 1997
to $1,391,688 as compared to expenses of $727,461 for the nine month period
ended September 30, 1996. The increase was primarily due to an increase in
personnel and related costs and advertising and marketing efforts to

23
<PAGE>

support the Company's expanded product line. The Company anticipates that
sales and marketing expenses will continue to grow in future periods should
the Company increase marketing activities and efforts to expand distribution
of its products.

General and Administrative. General and administrative expenses were
$1,117,974 for the year ended December 31, 1996, as compared to $777,123 for
the year ended December 31, 1995. This increase of 44% was primarily due to
increased headcount and the higher professional services costs associated with
being a public company. General and administrative expenses increased 3%
during the nine month period ended September 30, 1997 to $827,511 from
$799,572 in the first nine months of 1996. The increase was primarily due to
higher headcount and related personnel expenses as well as additional expenses
associated with being a public company. The Company anticipates that general
and administrative expenses may grow modestly in future periods in the event
it is necessary to accommodate expanded operations and to support a growing
customer base.

Other Income (Expense)

Other income is comprised primarily of interest income on cash balances,
which had been nominal until the completion of the Company's initial public
offering in August 1996. The net proceeds from the initial public offering
earned interest through investment in money market funds. For the year ended
December 31, 1996 the Company recognized interest income of $108,774 compared
with interest income of $12,850 for the year ended December 31, 1995. This was
offset by interest expense of $32,476 for the year ended December 31, 1996 and
interest expense of $22,857 for the year ended December 31, 1995. For the nine
month period ended September 30, 1997 the Company recognized interest income
of $70,731 offset by interest expense of $28,425 as compared with interest and
other income of $49,423 offset by interest expense of $28,684 for the same
period of the prior year.

Provision for Income Taxes

There was no provision for federal or state income taxes for the year ended
December 31, 1996 as the Company incurred net operating losses. As a result,
the net operating loss carryforwards increased. At December 31, 1996, the
Company had federal and state net operating loss carryforwards of
approximately $3,800,000 and $3,700,000, respectively. The Company also had
federal and state research and development tax credit carryforwards of
approximately $80,000 and $50,000, respectively. The net operating loss
carryforwards will expire at various dates beginning in 1998 through 2011, if
not utilized. Utilization of the net operating losses and credits is subject
to a substantial annual limitation due to the ownership change limitations
provided by the Internal Revenue Code of 1986 and similar state provisions.
The annual limitation may result in the expiration of net operating losses and
credits before utilization. For financial reporting purposes, a valuation
allowance of $3,052,000 has been recorded to offset deferred tax assets
recognized under Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," primarily related to the net operating loss
carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1996, the Company had cash of $4,066,825 and working
capital of $4,788,146. The Company used cash of $4,142,417 in its operating
activities for the year ended December 31, 1996. Principal uses of cash were
to fund the Company's net loss and increases in accounts receivable of
$327,916 and inventories of $479,060. During 1996, the Company financed its
working capital requirements and capital expenditures primarily from the sale
of equity securities and convertible debt. The Company received proceeds from
the issuance of preferred stock totaling $1,178,657 and convertible loans from
Ameritech and 4C Ventures totaling $1,500,000. The $1,500,000 in convertible
loans was converted to common stock concurrent with the Company's initial
public offering during the quarter ended September 30, 1996. In August 1996,
the Company completed an initial public offering of its common stock, which
provided the Company with net proceeds of approximately $5,200,000. The
Company had cash of $620,855 as of September 30, 1997 and working capital of
$1,687,096. The Company used cash of $3,389,724 in its operating activities
for the nine month period ended September 30, 1997. During the nine month
period ended September 30, 1997, the Company's principal uses of cash were to
fund the Company's working capital requirements and an increase in inventory
levels. In the

24
<PAGE>

absence of receiving the proceeds of this Offering, the Company anticipates
that its existing capital resources and cash generated from operations, if
any, will be sufficient to meet the Company's cash requirement only through
the end of 1997 at its anticipated level of operations.

The Company expects to incur additional substantial losses at least through
the end of calendar year 1998, and possibly longer. The Company's future
capital requirements will depend upon numerous factors, including the amount
of revenues generated from operations, the cost of the Company's sales and
marketing activities and the extent of the Company's research and development
activities, none of which can be predicted with certainty. The Company
anticipates that the proceeds of this Offering, together with existing capital
resources and cash generated from operations, if any, will be sufficient to
meet the Company's cash requirements through the end of 1998. However, the
Company may seek additional funding during the next 12 months and will likely
be required to seek additional funding after such time. There can be no
assurance that any additional financing will be available on acceptable terms,
or at all, when required by the Company. Moreover, if additional financing is
not available, the Company could be required to reduce or suspend its
operations, seek an acquisition partner or sell securities on terms that may
be highly dilutive or otherwise disadvantageous to investors purchasing the
shares of Common Stock offered hereby. The Company has experienced in the
past, and may continue to experience, operational difficulties and delays in
its product development and marketing activities due to working capital
constraints. Any such difficulties or delays could have a material adverse
effect on the Company's business, financial condition and results of
operations. In February 1997, the Company entered into a $1,500,000 line of
credit with Silicon Valley Bank, which is based upon accounts receivable.
Subject to meeting certain covenants the Company is entitled to borrow up to
80% of the value of eligible accounts receivable at an interest rate equal to
the prime rate plus 1%. This line of credit expires in February 1998. No
amounts have been drawn on the line as of September 30, 1997. As of September
30, 1997, the Company did not have any significant commitments for capital or
other expenditures.

FUTURE OPERATING RESULTS

Since its inception in 1993, the Company has incurred significant losses,
has had substantial negative cash flow, and has realized limited revenues. At
September 30, 1997, the Company had an accumulated deficit of $10,547,163, and
had incurred operating losses of $3,198,200 in the nine month period ended
September 30, 1997, $3,670,910 for the year ended December 31, 1996 and
$2,620,851 in the nine month period ended June 30, 1996. The Company expects
to continue to incur substantial operating losses at least through its fiscal
year ending December 31, 1998.

The Company has experienced and expects to continue to experience
fluctuations in operating results. In particular, the Company experienced
returns nearly equal to revenues for the quarter ending September 30, 1997.
The Company believes that the shortfall in net revenues for the third quarter
is principally the result of a continued shift in its distribution emphasis
from retail distribution channels to telecommunications carriers such as RBOCs
and LECs. Fluctuations in operating results may result in volatility in the
price of the Company's common stock. Operating results may fluctuate as a
result of many factors, including the volume and timing of orders received or
product returns, if any, during the period, the timing of commercial
introduction of future products and enhancements, competitive products and the
impact of price competition on the Company's average selling prices, product
announcements by the Company and its competition and the Company's level of
research and development and sales and marketing activities. Many of these
factors are beyond the Company's control, particularly those related to sales
and product returns.

25
<PAGE>

The Company's operating and other expenses are relatively fixed in the short
term. As a result, variations in timing of revenues, if any, will cause
significant variations in quarterly results of operations. Notwithstanding the
difficulty in forecasting future sales, the Company generally must undertake
its sales and marketing and research and development activities and other
commitments months or years in advance. Accordingly, any shortfall in product
revenues, if any, in a given quarter may materially adversely affect the
Company's business, financial condition and results of operations due to the
inability to adjust expenses during the quarter to match the level of product
revenues, if any, for the quarter. In addition, the Company's sales
expectations are based entirely on its internal estimates of future demand.
Due to these and other factors, the Company believes that quarter to quarter
comparisons of its results of operations are not necessarily meaningful, and
should not be relied upon as indications of future performance.

26
<PAGE>

BUSINESS

The following Business section contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under "Risk Factors" and
elsewhere in this Prospectus.

SoloPoint, Inc. designs, develops and markets innovative and easy-to-use
personal communications management products that connect people more
effectively. The Company's products are used by residential RBOC and LEC Voice
Mail customers, Small Office Home Office professionals and professionals in
corporate satellite offices. The Company's products are designed to allow
users to balance three important needs of communications dependent
individuals: Mobility, the ability to receive critical calls while away from
their primary office; Accessibility, the ability to be available on an as-
needed basis; and Control, the ability to monitor calls in order to decide, in
real time, from whom and when to accept a call.

The Company currently offers three product lines: SmartScreen, which allows
a residential RBOC or LEC Voice Mail customer to locally screen an incoming
call and take the call, if desired; SmartMonitor, which allows a mobile
professional to remotely monitor and take office calls from a cellular or PCS
phone; and SmartCenter, which provides a feature rich call management
environment for SOHO professionals and professionals in corporate satellite
offices.

INDUSTRY OVERVIEW

The number of communications-dependent individuals has increased
significantly in recent years. These individuals can be categorized into three
broad market categories: residential RBOC and LEC Voice Mail customers, mobile
professionals, and SOHO professionals and professionals in corporate satellite
offices.

RBOC and LEC Voice Mail Users

International Data Corporation estimates that as of the end of 1996 there
were over 9 million residential RBOC Voice Mail customers in the United
States, growing to over 18 million at the end of 2001. RBOC and LEC Voice Mail
has several advantages over traditional answering machines, including the
ability to take messages when the line is busy, better remote access, enhanced
message management capabilities and improved reliability. The Company believes
that the three major drawbacks to RBOC and LEC Voice Mail are the inability to
screen a call, the lack of a visual message waiting indicator and the
inability to share a fax machine on the same line as Voice Mail. If a call has
gone to Voice Mail, a subscriber must wait until the caller has left a
message, then dial a number, enter an access code, retrieve the message and
call back the caller if they choose. The lack of a visual message waiting
indicator forces the user to pick up his or her phone and listen for a stutter
dial tone to determine if a message has been left. As a result, important
calls may be missed and messages are often received later than if the blinking
light of a traditional answering machine had been available. The Company
believes that the lack of screening and a visual message waiting indicator
light are significant factors causing the low penetration and frequent
cancellation of Voice Mail service. Finally, the inability to support a fax
machine on the same line requires a fax user to add a second line.

The SoloPoint Solution--SmartScreen

The Company's SmartScreen product line remedies these deficiencies in RBOC
and LEC Voice Mail by providing users with the ability to screen incoming
calls, visually determine if there are new messages, and utilize a fax machine
on the same line as Voice Mail. SmartScreen connects to a Voice Mail user's
telephone line and utilizes RBOC and LEC Three-Way calling service. When a
user receives a call, SmartScreen picks up the call and connects the caller to
RBOC or LEC Voice Mail. Simultaneously, SmartScreen turns on a built-in
speaker so that the user can hear the caller as they leave a message. If the
user wishes to talk to the caller, he/she can pick up any phone connected to
the line and be immediately connected to the caller. In order to provide a
visual message waiting indicator, SmartScreen is designed to work with stutter
dial tone ("FSK") signaling provided by the RBOC or LEC. By providing the
ability to support a fax machine on the same line, fax users are not forced to
pay for a second line.

27
<PAGE>

Mobile Professionals

The mobile professional's success is dependent upon the ability to
effectively manage business communications in a mobile environment, thereby
enabling the user to receive critical calls and be more responsive to
customers. Missed calls, delayed responses to messages, or the appearance of
an unprofessional image can cause potential customers or clients to take their
business elsewhere. A large percentage of these mobile professionals utilize a
cellular or PCS phone to stay in touch while out of the office. Because their
office number and cellular or PCS number are not connected, phone calls to the
office are not immediately received in the field resulting in "phone tag" or
missed calls which can result in customer dissatisfaction and lost business.

The SoloPoint Solution--SmartMonitor

The SmartMonitor product line enables users to screen incoming office calls
from a cellular or PCS phone and connect to those callers the user chooses.
When a caller dials the user's office number, SmartMonitor simultaneously
rings the user's office telephone and remote cellular or PCS phone. The
SmartMonitor M-100 allows users to optionally monitor the call as the caller
leaves a message on his/her office answering machine. The Company's upcoming
SmartMonitor M-200 is designed to allow a user to monitor a message being left
in RBOC or LEC Voice Mail. If the user wants to talk with the caller, he/she
can be immediately connected by simply pressing a button on his or her remote
cellular or PCS telephone. A key benefit of SmartMonitor is that it enables a
user to be more accessible to customers without disclosing their cellular or
PCS telephone number. In addition, since the user's office and cellular or PCS
telephone rings simultaneously, the user can seamlessly move in and out of
their office without having to enable or disable the device or service.

SOHO Professionals and Professionals in Corporate Satellite Offices

While many corporations provide a communications infrastructure for their
employees that includes, among other things, secretarial and administrative
support and computer and telephony services, SOHO professionals and
professionals in corporate satellite offices must address their own personal
communications management needs. These needs usually include the ability to
provide a professional image through an Interactive Voice Response ("IVR")
system, the ability to filter and route calls automatically, and the ability
to tie all their communications devices and services together to work more
efficiently and effectively. These individuals have previously attempted to
address these needs through the use of an array of disparate, single function
communication devices, such as cellular or PCS phones, pagers, fax machines
and e-mail applications, and separate, basic broad-based communications
services, such as Voice Mail, Call Forwarding, Caller ID and Three-Way
Calling.

The SoloPoint Solution--SmartCenter

The Company's SmartCenter C-120 product responds to the needs of SOHO
professionals and professionals in corporate satellite offices who require an
automated method of ensuring that incoming calls are answered and properly
filtered and routed. The C-120 is attached to the professional's main line and
functions as an automated receptionist for incoming calls. Incoming calls are
answered by the C-120, which plays a greeting and provides the caller with a
set of options. These options can include transferring the caller to a
particular department, extension or person, providing the caller with pre-
recorded information (such as directions to the business), or providing the
caller with another set of menu options. The caller responds to the C-120 by
pressing the buttons on his touch-tone phone.

The C-120 was designed to give businesses a robust set of features typically
found on more expensive PC-based systems without the complicated installation
and configuration procedures typically associated with such systems. The C-120
can answer a business' phone, play a greeting, provide a series of options to
the caller, transfer the call to a specified extension and transfer the call
to another set of menu options. Other features include multiple greetings for
business hours and off business hours, a name directory, and extension
dialing. The C-120 also tracks a variety of call statistics, such as number of
calls processed at different times of the day. A non-technical user can
configure the C-120 by simply responding to the interactive voice prompts,
which are

28
<PAGE>

imbedded in the system. Although an optional graphical Windows-based PC
software program is provided and can assist users in creating more complex
procedures for handling calls, it is not required for normal operation of the
SmartCenter device. Installation is accomplished by plugging standard
telephone lines into the product. The Company believes that the C-120's
suggested retail price of under $500 makes it a cost-effective solution to the
call-processing needs of small business users.

STRATEGY

The Company's objective is to be a leading provider in the emerging personal
communications management products market. The Company's strategy for
achieving this objective includes the following key elements:

Leverage Proprietary Technology to Create an Innovative Line of Personal
Communications Products

The Company intends to continue to leverage the proprietary technology
incorporated in its initial SmartCenter product to design and bring to market
a broad line of personal communications management products designed to meet
the needs of a wide range of communications dependent individuals. In
accordance with this strategy, the Company has introduced SmartScreen and
SmartMonitor, which are substantially based upon the sophisticated technology
contained in the SmartCenter product. The Company plans to similarly develop
additional personal communications management products which the Company
believes will leverage its research and development expenditures, facilitate
the establishment of brand name recognition and expand the Company's
distribution and marketing capabilities.

Develop Telephone Company and Related Distribution Channels

The Company's products are designed to meet the needs of RBOC or LEC
customers while utilizing several RBOC and LEC services, such as Voice Mail,
Three-Way Calling and Caller ID. In May 1997, the Company entered into a
marketing agreement with Pacific Bell and is working to establish OEM or
additional marketing agreements with other RBOCs and with LECs so that its
products can be bundled with RBOC or LEC services to provide a complete
personal communications management solution. In addition, the Company's long
term objective is to leverage these relationships to access RBOCs' and LECs'
authorized resellers which the Company believes would also be appropriate
resellers of its products.

Establish Strategic Alliances and Business Relationships

The Company intends to establish additional strategic alliances and business
relationships with leading participants in various segments of the
communications markets. The Company believes these alliances and
relationships, if established, will enable it to take advantage of the
superior financial resources, technological capabilities, proprietary
positions and market presence of these companies. In accordance with this
strategy, the Company has received an equity investment from Ameritech. The
Company's objective is to establish a strategic relationship with Ameritech
involving marketing, distribution or manufacturing agreements.

29
<PAGE>

SOLOPOINT PRODUCTS

SmartScreen Family

SmartScreen S-100: The SmartScreen S-100 was introduced in January 1997, is
currently sold by Pacific Bell for $69.95 and is also available through
various retail outlets for prices between $99.95 and $119.95. The S-100
enables a residential RBOC or LEC Voice Mail user to screen and manage
incoming calls while callers are leaving messages on the user's RBOC or LEC
Voice Mail. The user can connect with a caller while he/she is leaving a Voice
Mail message at any time during the call. The following table lists the key
features of SmartScreen S-100 and the benefits the Company believes they bring
to the end customer:

Identify the caller and the
purpose of the call before
picking up the phone.
- -----------------------------------------------------------------------------------------
Anytime Connection with Allows a user to Real time connection to
Caller in Voice Mail instantaneously connect at important callers.
anytime with a caller while
the caller is leaving a
message in Voice Mail.
- -----------------------------------------------------------------------------------------
Visual Message Waiting A red light flashes to Eliminates need to dial
Indicator indicate new messages in voice mail to determine if
Voice Mail. a message has been left.
- -----------------------------------------------------------------------------------------
Voice Mail Fax Switch Allows an external fax More effective use of
machine to work on a Voice single telephone line.
Mail enabled line.
Avoids additional cost of a
second phone line.
</TABLE>

SmartScreen S-150: The SmartScreen S-150 was introduced in May 1997 and
currently retails for approximately $119.95. The S-150 is designed to meet the
needs of SOHO professionals who have a PC and use RBOC or LEC Voice Mail. The
S-150 provides an RS-232 interface to a PC and PC software that integrates
Voice Mail, Caller ID and the user's PC. In addition to providing all the
features and benefits of the SmartScreen S-100, the SmartScreen S-150 provides
the following additional features and the benefits:

<TABLE>
<CAPTION>
FEATURE DESCRIPTION BENEFIT TO CUSTOMER
- -----------------------------------------------------------------------------------------
<S> <C> <C>
PC Caller ID screen pop Caller ID information pops Provides visual information
up on the PC screen. about the person calling
prior to picking up the
call.

Personal call management.
- -----------------------------------------------------------------------------------------
Detailed call logging Key information for each Accurate record of call
call is saved and can be activity for billing or
stored or exported to other other purposes.
software applications.
- -----------------------------------------------------------------------------------------
TAPI driver Sends Caller ID information Automatic access of
to any TAPI compliant caller's record and
database or Personal information on any TAPI
Information Manager (PIM). compliant software
application.
- -----------------------------------------------------------------------------------------
Call indicator screen saver Screen saver indicates Allows user to ascertain
number of new calls. call status on a PC.
</TABLE>

30
<PAGE>

SmartMonitor Family

SmartMonitor M-100: The SmartMonitor M-100 was introduced in September 1996
and currently retails for $199.95. The M-100 is designed to meet the needs of
mobile professionals who have a direct access office number and an answering
machine. The M-100 enables users to screen incoming office calls from either
their cellular or PCS telephone. When a caller dials the user's office number,
SmartMonitor simultaneously rings the user's office number and cellular or PCS
telephone. The user can optionally monitor calls as messages are being left on
the user's office answering machine. The user can also elect to instantly
connect to callers by simply pushing a button. A key benefit of the M-100 is
that it enables users to be more accessible to their customers without
disclosing their cellular or PCS numbers or the user's current location. Since
the user's office telephone and Cellular or PCS telephone ring simultaneously,
the user can answer either telephone without having to disable or enable any
of the screening features of the M-100, an advantage over RBOC or LEC Call
Forwarding. The following table lists the key features of the SmartMonitor M-
100 and the benefits the Company believes they bring to the end customer:

Single number access
(office number).
- -----------------------------------------------------------------------------------------
Simultaneous Ringing of Rings the user's office Eliminates needs for the
Office and Remote Telephone phone and the remote user to routinely
cellular or direct-dialed enable/disable unit.
land based telephone at the
same time. Single number access
(office number).
- -----------------------------------------------------------------------------------------
Remote Programming Allows the user to remotely User does not need to
change the monitor telephone return to office to change
number. monitor telephone number.
</TABLE>

31
<PAGE>

SmartMonitor M-200: The Company commenced commercial shipment of the
SmartMonitor M-200 in September 1997 and is planning to retail it for $249.95.
The Company expects that this product will be available for customer shipment
in the fourth quarter of 1997. The M-200 will be designed to meet the needs of
high-end mobile professionals who have a direct access office number and RBOC
or LEC Voice Mail or answering machines. When used with RBOC or LEC Voice
Mail, the M-200 requires RBOC or LEC Three-Way Calling service. In addition to
providing all the features and benefits of the SmartMonitor M-100, the
SmartMonitor M-200 provides the following additional features.

<TABLE>
<CAPTION>
FEATURE DESCRIPTION BENEFIT TO CUSTOMER
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Permits local screening of Allows a user to discretely Ultimate control of inbound
Voice Mail and answering monitor and then optionally calls.
machines take incoming office calls
from either a cordless or Gives the customer the
stationary telephone. ability to utilize a
cordless phone and still
monitor phone calls.
- -----------------------------------------------------------------------------------------
Return callers to Voice Mail Allows a user to send a Maximize call management.
after talking with them caller back into Voice Mail
after talking with them. Voice Mail records
information when you are
busy.
- -----------------------------------------------------------------------------------------
Voice prompted set up menus Natural human voice menuing Simplifies setup.
system for setup and
configuration. Simplifies normal
interactions.
- -----------------------------------------------------------------------------------------
Pause and special character Allows the user to enter Supports centralized
dialing pauses and special corporate Voice Mail
characters into the dialing configurations.
string.
Supports Credit Card and
other forms of call
payment.

Supports consolidation of
messages into cellular
Voice Mail systems.
- -----------------------------------------------------------------------------------------
Supports both RBOC and LEC Allows a user to use Voice Works with customers'
Voice Mail or answering Mail or an answering machine existing answering machine
machine as their messaging solution. or RBOC and LEC Voice Mail.
</TABLE>

SmartCenter Family

The SmartCenter C-120 is the successor to the SmartCenter C-100, which the
Company introduced in March 1996. The C-120 currently retails for $495 per
unit and is a complete, multifunction, communications management platform
designed to meet the needs of mobile, communications-dependent SOHO
individuals. The SmartCenter C-120 is an integrated communications management
hardware device that fits under a telephone, connects to two analog telephone
lines and provides four general purpose extensions for connecting personal
office telephone equipment. The core building block of the C-120 is its
efficient, feature rich, analog switching matrix, which provides many of the
PBX-like functions of larger, more expensive switches. The configuration and
management of the C-120 can be accomplished through either the convenience of
a voice-prompted, touch-tone menuing interface or a graphical configuration
software application running on a PC that can be connected to the C-120's
serial interface. The C-120 can route, filter, prioritize and manage both
incoming and outgoing calls through the use of its proprietary technology.

32
<PAGE>

The SmartCenter C-120 supports a number of features that provide a complete
personal communications management system for mobile, communications-dependent
individuals. These features are entirely dependent upon the Bellcore
Specifications. The following table lists the key features of the SmartCenter
C-120 and the benefits the Company believes they bring to the end customer:

The SmartCenter C-120 can be configured and managed through a customized,
voice-prompted touch-tone menuing interface, either remotely or locally, or
through SmartStart, the C-120's graphical configuration software application.
Most basic features of the C-120 can be configured through voice-prompted
touch-tone sequences, either from a local extension telephone or a remote
telephone. Callers dialing in are required to enter a PIN to access the
configuration menus, thus ensuring a secure communications environment.
SmartStart, a graphical user interface, can be used to configure and manage
the SmartCenter C-120. SmartStart is a full 32-bit Windows-based software
application that can run under Windows 95, Windows NT and Windows 3.11 (with
32-bit extensions). With SmartStart, the user can configure any number of
"call handlers" and store them on a PC. A call handler is a set of
instructions that directs the SmartCenter C-120 on how to handle an incoming
call. Call handlers are created "visually" through the use of a call handler
template editor. Once handlers are configured and downloaded, the SmartStart
application can be terminated and the PC disconnected from the SmartCenter C-
120.

<TABLE>
<CAPTION>
FEATURE DESCRIPTION BENEFIT TO CUSTOMER
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Remote Monitoring Allows a user to discreetly Control of inbound cellular
monitor and then optionally calls.
take an incoming office
calls from either a remote Reduced "phone tag" with
cellular or direct-dial land customers.
based telephone.
Single number access
(office number).
- -----------------------------------------------------------------------------------------
Local Monitoring Allows a user to locally Caller identification for
screen undetected incoming better control of calls.
calls on a telephone line
utilizing RBOC Voice Mail
services.
- -----------------------------------------------------------------------------------------
Auto Attendant Menuing Allows a user to present a More professional image.
customized, voice-prompted
menu to a caller who can More effective handling of
then direct the call to an calls.
answering machine, Voice
Mail, pager, extension, fax Improved ability to find
machine, or other remote the customer.
telephone number.
- -----------------------------------------------------------------------------------------
Direct Routing Allows a user to Single number access.
specifically define where to
route a specific incoming More convenient for caller.
call. Routing can be
determined based on Caller Improved ability to have
ID, distinctive ring, phone calls follow the
fax/voice type, time of day, customer.
or day of week.
- -----------------------------------------------------------------------------------------
Fax Routing Allows a user to receive and Better utilization of
transmit faxes from either telephone lines.
telephone line, re-route
incoming faxes to a remote Single number fax access.
fax machine automatically,
and prevents accidental fax More reliable fax
interruption if an extension reception.
is picked up.
</TABLE>

33
<PAGE>

CORE TECHNOLOGY

The Company has developed a number of technology building blocks which the
Company believes enables it to relatively quickly and efficiently develop new
hardware and software personal communications management products. The
Company's most important hardware building block is the low cost, highly
flexible analog-switching core. In addition to implementing the basic PBX-like
switching function, this circuit implements additional higher level PBX
features such as DTMF detection/generation, silence detect, full/half duplex
separation and call progress monitoring. Another key hardware building block
is the automatic gain recovery circuitry, used to dynamically control the
voice quality and volume between two central office lines that are connected
together in either a half duplex or full duplex manner. The Company believes
that this circuit significantly reduces any line loss, which might result in
poor signal quality upon the connection of the two central office lines. The
Company believes that the nature of its core technology will enable it to
implement its strategy of developing a broad line of personal communications
management products.

The Company has a library of telephony-based software algorithms and
Application Programming Interfaces ("APIs") which provide the basis of all the
features in SmartCenter, SmartMonitor and SmartScreen. These algorithms and
APIs work in conjunction with the hardware to provide unique functionality.

SALES AND MARKETING

Since March 1996, the Company has introduced three product lines that are
designed to address specific market segments and customers. The Company's
products are sold to residential RBOC and LEC Voice Mail customers, mobile
professionals and SOHO professionals and professionals in corporate satellite
offices. The Company has identified distribution channels for each of these
product lines and intends to market to these channels accordingly.

The Company's SmartScreen product line is targeted at residential RBOC and
LEC Voice Mail customers. The Company believes that the primary channels of
distribution for the SmartScreen family are RBOCs and LECs. The Company's
strategy is to encourage these telephone companies to co-brand, market and
sell SmartScreen products to Voice Mail subscribers at discounted prices
and/or on favorable terms to enhance the benefits of RBOC and LEC Voice Mail
in order to retain existing subscribers or acquire new subscribers. In May
1997, the Company entered into a marketing agreement with Pacific Bell to
market a co-branded version of the S-100 to Pacific Bell's residential Voice
Mail customers. The Company believes that its current relationship with
Pacific Bell and the future relationships with the other RBOCs and LECs which
it intends to establish in connection with marketing the SmartScreen S-100
product will aid it in developing the telephone companies as a distribution
channel for its other products, the SmartCenter C-120 and the SmartMonitor M-
100.

The Company's SmartMonitor product line is targeted at mobile professionals.
The SmartMonitor M-100 is designed for mobile professionals who use answering
machines and the SmartMonitor M-200 is designed for mobile professionals who
use RBOC or LEC Voice Mail. The M-200 is expected to be available for customer
shipment in the fourth quarter of 1997. The Company believes that the primary
channel of distribution for the M-100 is the network of retailers, dealers and
distributors currently marketing cellular and PCS telephones and the primary
channels of distribution for the M-200 are RBOCs and LECs. Because mobile
professionals use cellular and PCS telephones and pagers, the Company also
intends to pursue relationships with the wireless operations of RBOCs and
LECs.

The Company's SmartCenter product line is targeted at SOHO professionals and
professionals in corporate satellite offices that need to be integrated into
the corporate communications infrastructure. The Company believes the primary
sales distribution channel for the C-120 targeted at SOHO professionals is
office supply retailers. In November 1996, the Company received an initial
stocking order from Office Depot. The Company believes the primary sales
channel for the C-120 targeted at corporate satellite offices is direct from
the Company or through VARs. Accordingly, the Company plans to spend a portion
of the proceeds of this Offering to develop a direct corporate sales force and
VAR sales and support programs.

34
<PAGE>

In addition to the foregoing targeted distributed channels, in order to make
its products more widely available to end-users the Company also markets its
products through catalogs targeted at telephony customers, such as Hello
Direct.

MANUFACTURING

The Company's manufacturing operations consist of final integration and test
of its products at the Company's facilities, in order to maintain overall
product quality. The Company subcontracts the manufacture of all of the
subassemblies of SmartCenter on a sole source basis offshore to CT Continental
(for circuit board fabrication) and Wellex Corporation (for circuit board
assembly). The Company subcontracts the manufacture of the subassemblies of
SmartMonitor on a sole source basis to Wellex Corporation (for circuit board
assembly) and AC International, Inc. (for circuit board fabrication). The
Company is currently subcontracting the subassemblies of SmartScreen on a sole
source basis to CT Continental offshore. The Company believes that there are
alternative contract manufacturers which could produce such subassemblies, but
it is not currently pursuing agreements or understandings with such
alternative sources. To date, the contract manufacturers have not been
required to assemble and deliver material quantities of subassemblies of any
of the Company's current products. Sole source integrated circuit suppliers
include but are not limited to Motorola, Inc., Texas Instruments, National
Semiconductor Corporation, Exar Corporation and DSP Technology, Inc. There can
be no assurance that such contract manufacturers or sole source integrated
circuit suppliers will be able to supply the Company with sufficient
quantities of subassemblies or components in a timely manner. If a contract
manufacturer or sole source supplier were unable to assemble or deliver the
Company's subassemblies or components in a timely manner, for any reason, the
Company's business, financial condition and results of operations would be
materially adversely affected. In the event of a reduction or interruption of
supply to the Company of such subassemblies or components, it could take a
significant period of time for the Company to qualify alternative suppliers,
redesign the product as necessary and commence manufacturing. The Company's
inability to obtain sufficient quantities of subassemblies or sole or limited
source components in the future or to develop alternative sources in the
future, could result in delays in product introductions or shipments, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.

RESEARCH AND DEVELOPMENT

Since its inception, the Company has made a substantial investment of
approximately $4,400,000 as of September 30, 1997 in the research and
development of its core technology. This investment has resulted in the
modular hardware and software technology which the Company has utilized in its
three product lines: SmartCenter, SmartMonitor and SmartScreen. The Company
intends to continue to leverage this core technology to develop additional
products to broaden its product line. While the Company believes that its
future success, if any, will depend in large part on its ability to develop
additional products that meet the unique needs of each RBOC or LEC, the
Company expects to continue to derive substantially all of its revenues, if
any, over the next 12 months from the sale of its existing products. As of
September 30, 1997, the Company's product development staff consisted of four
engineers. The Company also utilizes consultants on a project basis from time
to time. The Company's total expenses for research and development for the
years ended December 31, 1995 and 1996 and for the period from inception to
December 31, 1996 were $1,385,769, $1,523,599 and $3,353,717, respectively.

COMPETITION

The market for communications products is highly competitive and
characterized by rapid technological change, frequent new product
introductions, short product life cycles, evolving industry standards and
significant price erosion over the life of a product. The Company believes
that the principal competitive factors affecting this market include product
features, compatibility with a wide variety of switching configurations,
price, ease of use, quality, customer service and support, as well as company
and product reputation. Within specific ranges of functionality, the Company
experiences and expects to continue to experience competition from many
sources, including but not limited to: (i) companies that provide
communications management services, such as Priority Call Management, Inc.,
Wildfire Communications, MCI, AccessLine Technologies, Inc. and RBOCs such as

35
<PAGE>

Ameritech Corporation and U.S. West; (ii) companies that directly provide
personal communications management products, such as Bogen Communications,
Inc., Beond Communications, Centrepoint s/w Technologies, Incorporated,
Datacom, Jetstream Communications, Inc. and Notify Corporation; and (iii)
large consumer electronics companies that offer telephony products, such as
enhanced answering machines, including AT&T Corporation, Sony Corporation,
Panasonic Company and others. The Company believes that there will be intense
competition between companies that provide communications management services,
such as RBOCs, and companies that directly provide communications management
products.

Most of the Company's present and potential competitors have substantially
greater financial, marketing, technical and other resources than the Company.
Furthermore, the Company also expects to compete with companies that have
substantial manufacturing, marketing and distribution capabilities, areas in
which the Company has limited or no experience. Increased competition, direct
and indirect, could materially adversely affect the Company's revenues and
profitability through pricing pressure and loss of market share. There can be
no assurance that the Company will be able to compete successfully against
existing and new competitors as the market evolves and the level of
competition increases. The failure to compete successfully against existing
and new competitors would have a material adverse effect upon the Company's
business, financial condition and results of operations.

Current and potential competitors have established and may establish
cooperative relationships with third parties to increase the ability of their
products to address the needs of the Company's prospective customers. To the
extent such third parties enter into such relationships with competitors of
the Company, such third parties are likely to be unable or unwilling to enter
into similar relationships with the Company. It is possible that new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share. As a result, such competitors may be able to respond
more quickly to new or emerging technologies and to changes in customer
requirements or to devote greater resources to the development, promotion and
sales of their products than can the Company. There can be no assurance that
these competitive pressures will not materially adversely affect the Company's
business, financial condition and results of operations.

INTELLECTUAL PROPERTY RIGHTS

The Company relies upon a combination of patents, trademarks and non-
disclosure agreements in order to establish and protect its proprietary
rights. The Company has filed applications for certain patents covering its
current products and intends to continue to file applications, as appropriate,
for any of the Company's future products. There can be no assurance that
patents will issue from any of its pending applications or, if patents do
issue, that the claims allowed will be sufficiently broad to protect the
Company's technology. In addition, there can be no assurance that any patents
issued to the Company will not be challenged, invalidated or circumvented, or
that the right granted thereunder will provide proprietary protection to the
Company. Since United States patent applications are maintained in secrecy
until patents issue and since the publication of inventions in technical or
patent literature tend to lag behind such inventions by several months, the
Company cannot be certain that it was the first creator of inventions covered
by its pending patent applications, that it was the first to file patent
applications for such inventions or that the Company is not infringing on the
patents of others.

36
<PAGE>

equivalent or superior to the Company's technologies. In addition, the laws of
certain foreign countries do not protect the Company's intellectual property
rights to the same extent, as do the laws of the United States. Although the
Company continues to implement protective measures and intends to defend its
proprietary rights vigorously, there can be no assurance that these efforts
will be successful. In the absence of effective protection of its intellectual
property, there can be no assurance that third parties will not develop and
market copies of the Company's products.

The Company has received a letter from a third party asserting certain
patents for various telephone call processing products and seeking to enter
into licensing agreements with the Company with respect to such patents. The
Company is currently reviewing this matter to determine the need for any such
licensing agreements. There can be no assurance that the Company will not be
obligated to defend itself in court against allegations of infringement of
third-party patents or that the Company would prevail in any such litigation
seeking either damages or an injunction against the sale of the Company's
products. An adverse outcome in such a suit could subject the Company to
significant liabilities to third parties, require disputed rights to be
licensed from third parties or require the Company to cease using such
technology.

PERSONNEL

As of September 30, 1997, the Company employed 14 people on a full-time
basis. Of these, five were responsible for research and development, three
were in customer support and quality assurance, two were responsible for sales
and marketing, three were responsible for finance and administration, and one
was responsible for operations. The Company also utilizes consultants and part
time employees to fulfill certain projects in the area of engineering,
manufacturing and corporate marketing. A union does not represent the
Company's employees and the Company considers its relationship with its
employees to be good.

PROPERTY

The Company leases approximately 8,200 square feet in a facility in Los
Gatos, California. The facility is subject to a lease, which expires in
September 1998 and is renewable at the Company's option for one additional
year. The current monthly rent is approximately $7,442. The Company believes
that its current facilities are sufficient to meet its needs for the
foreseeable future.

LITIGATION

The Company is not a party to any material legal proceedings.

37
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The executive officers and directors of the Company and their ages are as
follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Charlie Bass(1)............. 55 Chairman of the Board of Directors
Edward M. Esber, Jr......... 45 President, Chief Executive Officer and Director
Arthur G. Chang............. 38 Chief Operating Officer and Vice President of
Research and Development
Ronald J. Tchorzewski....... 47 Chief Financial Officer and Vice President of
Finance
Donald Nanneman............. 43 Vice President of Product Marketing
Patrick Grady(2)............ 30 Director
Giuliano Raviola(1)......... 64 Director
Charles Ross(2)............. 32 Director
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

Charlie Bass has served as Director and Chairman of the Board since he co-
founded the Company in March 1993. Dr. Bass served as Chief Executive Officer
of the Company from March 1995 until October 1995. Dr. Bass is the general
partner of Bass Associates, a venture capital firm and has served in that
capacity since September 1989. Dr. Bass also currently serves as a Director of
Meridian Data, Inc., and Socket Communications, Inc. Dr. Bass is also a
consulting professor of electrical engineering at Stanford University. Dr.
Bass holds a Ph.D. in electrical engineering from the University of Hawaii.

Edward M. Esber, Jr. joined the Company as President, Chief Executive
Officer, and Director in October 1995 and assumed the position of Chief
Financial Officer for the period from May 1996 to July 1997. From May 1994 to
June 1995, Mr. Esber was Chairman, Chief Executive Officer and President of
Creative Insights, Inc., a computer toys company. From May 1993 to June 1994,
Mr. Esber was President and Chief Operating Officer of Creative Labs, Inc.,
the US subsidiary of Creative Technology Ltd. From 1985 to 1990, Mr. Esber was
Chairman, President, Chief Executive Officer and Director of Ashton-Tate, a
database software company and maker of dBase. Mr. Esber has served as a
director of Quantum Corp. since 1988, Borealis Technology Corporation since
1996 and Integrated Circuit Systems Technology since 1997. Mr. Esber holds a
bachelor's degree in computer engineering from Case Western Reserve
University, a master's degree in electrical engineering from Syracuse
University and a M.B.A. in general management from Harvard Business School.

Arthur G. Chang joined the Company as Chief Operating Officer and Vice
President of Research and Development in February 1996. From November 1993 to
April 1995, Mr. Chang was Chairman, President, Chief Executive Officer and
Director of CommVision Corporation, a wide area remote access company. From
February 1988 to April 1993, Mr. Chang was co-founder and Senior Vice
President of Product Development and Product Marketing for Parallan Computer,
Inc. (now Meridian Data, Inc.), a company that made fault-tolerant
superservers for PC networks. Mr. Chang holds a bachelor's degree in
electrical engineering from Northwestern University and a master's degree in
electrical engineering and computer science from the University of California
in Berkeley.

Ronald J. Tchorzewski joined the Company in October 1996 as Vice President
of Finance and was elected Chief Financial Officer in July 1997. From July
1996 to October 1996, Mr. Tchorzewski was an independent consultant. From
September 1993 to July 1996, Mr. Tchorzewski served as Chief Financial Officer
of ULTRADATA Corporation. From July 1987 to September 1993, Mr. Tchorzewski
held various positions with Cadence Design Systems, Inc., most recently as
Vice President and Corporate Controller. Mr. Tchorzewski holds

38
<PAGE>

a bachelor's degree in accounting from Seton Hall University and a master's
degree in finance from Seton Hall University.

Donald Nanneman joined the Company in January 1997 as Vice President of
Marketing. From March 1992 to December 1996, Mr. Nanneman was Group Marketing
Manager at Octel Communications. Prior to joining Octel, Mr. Nanneman was Vice
President of Sales and Marketing for MediaWorks, a workgroup software
publisher. Prior to MediaWorks, Mr. Nanneman held marketing management
positions with Apple Computer, Britton Lee and other technology companies.

Patrick Grady has served as a Director of the Company since July 1996. Mr.
Grady has been a Managing Director, Venture Capital for H.J. Meyers & Co.,
Inc., an investment bank, since March 1996. From June 1993 to March 1996 Mr.
Grady was Senior Vice President of Corporate Finance at H.J. Meyers & Co.,
Inc. From March 1991 to May 1993, Mr. Grady was Vice President of Corporate
Finance at Josephthal Lyon & Ross, an investment bank. Mr. Grady also
currently serves as a Director of Deltapoint, Inc., and Borealis Technology
Corporation. Mr. Grady attended Pace University in New York. Mr. Grady was
nominated by the Underwriter to serve on the Board of Directors.

Giuliano Raviola has served as a Director of the Company since September
1996. Mr. Raviola has been a Managing Director of the corporate general
partner of 4C Ventures, L.P., a Venture Capital limited partnership, since
March 1995. From January 1993 to February 1995, Mr. Raviola was self-employed
as an independent consultant. From January 1991 to December 1992, Mr. Raviola
was President of Olivetti ATC Inc., a developer of computers and information
systems. From September 1990 to December 1992, Mr. Raviola was President of
International Technology Ventures, Inc., a venture capital firm. Mr. Raviola
also currently serves as director of several private companies. Mr. Raviola
holds degrees in engineering from Politecnico in Turin, Italy, and from
Columbia University in New York. Mr. Raviola was nominated by 4C Ventures to
serve on the Board of Directors.

Charles Ross has served as a Director of the Company since September 1996.
Mr. Ross has been a Director of Venture Capital for Ameritech Development
Corporation, a subsidiary of Ameritech Corporation, since May 1993. From May
1992 to May 1993, Mr. Ross was a Manager of General Electric Medical Systems,
a manufacturer of diagnostic imaging systems. Mr. Ross holds a bachelor's
degree in Electrical Engineering from Marquette University and a M.B.A. from
Indiana University. Mr. Ross was nominated by Ameritech to serve on the Board
of Directors.

The Company currently has authorized five directors. All directors are
elected to hold office until the next annual meeting of shareholders of the
Company and until their successors have been elected. Officers are elected by
and serve at the discretion of the Board of Directors. The Company has granted
to each of 4C Ventures, L.P. ("4C Ventures") and Ameritech the right to
nominate one member of the Board of Directors so long as they respectively own
more then 3% of the outstanding Common Stock of the Company. Certain principal
shareholders of the Company have agreed to vote in favor of such nominees.
Additionally, H.J. Meyers & Co., Inc. has the right to nominate one member of
the Board of Directors. See "Principal Shareholders" and "Underwriting."

39
<PAGE>

FAMILY RELATIONSHIPS

There are no family relationships among any of the directors or executive
officers.

COMPENSATION OF DIRECTORS

The Company's directors do not currently receive any cash compensation for
service on the Board of Directors, but directors may be reimbursed for
reasonable expenses incurred in connection with attendance at Board and
committee meetings. The Company has, however, recently initiated a policy of
providing directors with an automatic grant of an option to purchase 12,000
shares of Common Stock of the Company each year on the day immediately
following the annual shareholders' meeting of the Company. In July 1997 the
Company granted options exercisable for 12,000 shares of Common Stock to each
of Directors Bass, Raviola, Grady and Ross or their affiliates.

EMPLOYMENT AGREEMENTS

In October 1995, The Company entered into an employment agreement with
Edward M. Esber, Jr., President and Chief Executive Officer of the Company.
Pursuant to such agreement, Mr. Esber received an annual base salary of
$180,000 plus a performance bonus of up to $45,000 for 1996. Mr. Esber's base
salary for 1997 remains at $180,000. Also pursuant to such agreement, Mr.
Esber received a right to purchase 140,000 shares of Common Stock. If Mr.
Esber's employment is involuntarily terminated without cause prior to November
1, 1999, Mr. Esber will continue to receive his base salary and benefits for a
period of six months from the date of termination. See "Certain Relationships
and Related Transactions."

In February 1996, the Company entered into an employment agreement with
Arthur G. Chang, the Chief Operating Officer of the Company. Pursuant to such
agreement, Mr. Chang received an annual salary of $85,000. In July 1996, Mr.
Chang's annual salary was increased to $132,000. Mr. Chang's base salary was
increased to $156,000 in March 1997. Also pursuant to such agreement, Mr.
Chang received the right to purchase 75,000 shares of Common Stock. See
"Certain Relationships and Related Transactions."

The Company currently has no other compensatory plan or arrangement with any
of the Named Officers where the amounts to be paid exceed $100,000 and which
are activated upon resignation, termination or retirement of any such
executive officer upon a change in control of the Company.

40
<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the compensation
paid by the Company to the Chief Executive Officer and each of the other
executive officers of the Company whose total salary and bonus for fiscal year
1996 exceeded $100,000 (collectively the "Named Officers").

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ --------------
NAME OF PRINCIPAL ALL OTHER
POSITION FISCAL YEAR SALARY($) BONUS($) OPTIONS/SARS # COMPENSATION($)
----------------- ----------- --------- -------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Edward M. Esber, Jr.(1). 1995 $ 32,637 $ -- -- $1,124(3)
Chief Executive 1996 180,000 45,000(2) -- 4,496(3)
Officer, President and
Director
Arthur G. Chang (4)..... 1996 104,583 -- -- 4,197(3)
Chief Operating Officer
</TABLE>
- --------
(1) Mr. Esber joined the Company in October 1995.
(2) Represents bonus earned by the Named Officer based upon his performance in
the year noted but credited in the subsequent year against the Named
Officer's indebtedness to the Company. See "Certain Relationships and
Related Transactions."
(3) Consists of life and health insurance premiums paid by the Company.
(4) Mr. Chang joined the Company in February 1996. As of December 31, 1996,
Mr. Chang earned an annualized salary of $132,000.

During the fiscal year ended December 31, 1996, there were no grants of
stock options to, nor any exercise of stock options by the Named Officers.

BENEFIT PLANS

Amended and Restated 1993 Incentive Stock Plan. The Company has reserved an
aggregate of 897,000 shares of Common Stock for issuance under its Amended and
Restated 1993 Incentive Stock Plan (the "Stock Plan"). The Stock Plan was
originally adopted by the Board of Directors in March 1993. The plan was
amended and restated by the Board of Directors in April 1997 and approved by
the shareholders in May 1997. As of September 30, 1997, options to purchase a
total of 28,906 shares (net of cancellations) had been exercised, options to
purchase a total of 298,838 were outstanding, stock grants totaling 93,314 had
been made, and 475,942 shares remained available for future grants. The Stock
Plan will be in effect for a term of ten years unless terminated earlier. The
Stock Plan provides for grants of incentive stock options, nonstatutory stock
options, and stock purchase rights to employees (including employees who are
officers) of the Company and its subsidiaries and grants of nonstatutory stock
options to non-employee directors of the Company; provided however, that no
employee may be granted options or stock purchase rights to purchase more than
75,000 shares in any one fiscal year. The Plan also provides for grants of
nonstatutory stock options and stock purchase rights to consultants. The Stock
Plan may be administered by the Board of Directors or by a committee appointed
by the Board (the "Administrator"), in a manner that satisfies the legal
requirements relating to the administration of stock plans and issuance of
shares under all applicable laws. The Stock Plan is currently administered by
the Board of Directors.

41
<PAGE>

The exercise price of options granted under the Stock Plan is determined by
the Administrator. With respect to incentive stock options granted under the
Stock Plan, the exercise price must be at least equal to the fair market value
per share of Common Stock on the date of grant, and the exercise price of any
incentive stock option granted to a participant who owns more than 10% of the
voting power of all classes of the Company's outstanding capital stock must be
equal to at least 110% of the fair market value of the Common Stock on the
date of grant. The maximum term of an incentive stock option granted under the
Stock Plan may not exceed ten years from the date of grant (five years in the
case of a participant who owns more than 10% of the voting power of all
classes of the Company's outstanding capital stock). The term of a
nonstatutory stock option is determined by the Administrator. In the event of
termination of an optionee's employment or consulting arrangement, options may
only be exercised, to the extent vested as of the date of termination, for a
period specified in the notice of grant. If the notice of grant does not
specify the period for exercise, the optionee will have three months following
the date of termination. Options and stock purchase rights may not be sold or
transferred other than by will or the laws of descent and distribution, and
may be exercised during the life of the optionee only by the optionee.

A stock purchase right allows an employee or consultant to purchase shares
of the Company's Common Stock pursuant to a restricted stock agreement. Unless
otherwise determined by the Administrator, the restricted stock purchase
agreement gives the Company an option, exercisable upon termination of the
purchaser's employment for any reason including death or disability, to
repurchase the shares at the original price paid by the purchaser. Such
repurchase option lapses at a rate determined by the Administrator.

In the event of a merger or sale of substantially all of the Company's
assets, all outstanding options and stock purchase rights may be assumed or an
equivalent option or stock purchase right substituted by the successor
corporation or its parent or subsidiary. In the absence of such assumption or
substitution, all options and stock purchase rights will become fully
exercisable and vested. Any options and stock purchase rights not assumed or
substituted for will terminate thirty days after the Administrator gives
notice.

The Board has the right to amend or terminate the Stock Plan, provided that
no such action may impair the rights of any optionee without the written
consent of any such optionee, and provided further that certain amendments are
by law subject to shareholder approval. The Stock Plan will terminate in 2003
unless terminated sooner by the Board.

The 401(k) Plan. The Company adopted a 401(k) savings plan (the "401(k)
Plan") effective in January 1995. In January 1997, the Company adopted a
restated 401(k) Plan, effective as of January 1, 1996. Eligible employees who
have attained age 18 may participate in the 401(k) Plan. Participants in the
401(k) Plan may defer compensation in an amount not in excess of the annual
statutory limit ($9,500) in 1997. The Company may make matching contributions
in the amount determined annually by the Board of Directors. All contributions
are credited to separate accounts maintained in trust for each participant and
are invested, at the participant's direction, in one or more of the investment
funds made available under the 401(k) Plan. Matching contributions, if any,
vest over a six-year period. The 401(k) Plan is intended to qualify under
Section 401 and 501 of the Internal Revenue Code so that contributions to the
401(k) Plan and income earned on the plan contributions are not taxable to
employees until withdrawn and so that the contributions will be deductible by
the Company when made. There were no contributions made by the Company for the
year ended December 31, 1996.

42
<PAGE>

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS

The Company's Amended and Restated Articles of Incorporation provide that to
the fullest extent permitted by the California Business Corporation Act, the
Company's Directors will not be liable for monetary damages to the Company or
its shareholders. The Company's Bylaws provide that the Company will indemnify
its directors and, by action of the Board of Directors, may indemnify its
officers, employees and other agents of the Company to the fullest extent
permitted by applicable law, except for any legal proceeding that is initiated
by such Directors, officers, employees or agents without authorization from
the Board of Directors. The Company has entered into indemnification
agreements with its officers and Directors containing provisions which require
the Company, among other things, to indemnify the officers and directors
against certain liabilities that may arise by reason of their status or
service as directors or officers (other than liabilities arising from willful
misconduct of a culpable nature) and to advance their expense incurred as a
result of any proceeding against them as to which they could be indemnified.

At the present time, there is no pending litigation or proceeding involving
a director, officer, employee or other agent of the Company in which
indemnification would be required or permitted. The Company is not aware of
any threatened litigation or proceeding that may result in a claim for such
indemnification.

43
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since the Company's inception in March 1993, the Company issued, in private
placement transactions (collectively, the "Private Placement Transactions"),
shares of Preferred Stock and warrants to purchase Preferred Stock as follows:
an aggregate of 25,013 shares of Series A-1 Preferred Stock at $10.00 per
share in January 1994; an aggregate of 7,500 shares of Series A-1 Preferred
Stock was exchanged for 300,000 shares of Common Stock in a recapitalization
in January, 1994 (the Company received no cash as a result of this
recapitalization); an aggregate of 79,527 shares of Series A-2 Preferred Stock
at $3.50 per share and warrants to purchase 8,570 shares of Series A-2
Preferred Stock at $3.50 per share in May 1994; an aggregate of 143,750 shares
of Series A-3 Preferred Stock at $4.00 per share in July and August 1994; an
aggregate of 100,795 shares of Series A-4 Preferred Stock at $4.50 per share
in December 1994 and January 1995; an aggregate of 154,000 shares of Series A-
5 Preferred Stock at $5.00 per share in March and April 1995; an aggregate of
85,000 shares of Series A-6 Preferred Stock at $6.00 per share in June 1995;
warrants to purchase an aggregate of 57,320 shares of Series A-7 Preferred
Stock at $5.00 per share in September and October 1995; an aggregate of
532,853 shares of Series A-7 Preferred Stock and warrants to purchase 186,950
shares of Series A-7 Preferred Stock at $5.00 per share in February and March
1996, in exchange for cash of $1,200,500 and cancellation of $1,433,000 of
convertible notes payable plus $30,770 of accrued interest. Investors
purchasing Series A-7 Preferred Stock for cash were issued a warrant to
purchase 50% of the number of shares they purchased resulting in the issuance
of warrants for 120,050 shares of Series A-7 Preferred Stock at an exercise
price of $5.00 per share. Holders of convertible notes payable who converted
their notes into Series A-7 Preferred Stock and purchased shares of Series A-7
Preferred Stock for cash as requested by the Company, were issued additional
warrants to purchase the number of shares of Series A-7 Preferred Stock that,
when combined with the warrants previously issued in connection with the
convertible promissory notes, equaled 50% of the number of shares of Series A-
7 Preferred Stock purchased in the financing by cash or cancellation of
indebtedness. This resulted in the issuance of warrants to purchase an
additional 66,900 shares of Series A-7 Preferred Stock at $5.00 per share. As
part of the Series A-7 financing, approximately 76,667 shares of Series A-6
Preferred Stock were converted into 92,000 shares of Series A-7 Preferred
Stock. Additionally, after the closing of the Series A-7 financing, a
consultant of the Company was issued 8,004 shares of Series A-7 Preferred
Stock in exchange for services rendered to the Company.

Participants in the Private Placement Transactions included the following
directors, executive officers and holders of more than 5% of the outstanding
shares of Common Stock:

<TABLE>
<CAPTION>
WARRANTS FOR WARRANTS FOR
SERIES A-1 SERIES A-2 SERIES A-2 SERIES A-3 SERIES A-4 SERIES A-5 SERIES A-7 SERIES A-7
PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED PREFERRED
INVESTOR STOCK STOCK STOCK STOCK STOCK STOCK STOCK STOCK
-------- ---------- ---------- ------------ ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bass Associates......... 27,500 14,521 2,428 12,500 14,210 10,000 66,774 28,200
Ameritech Development
Corporation............ 104,119 16,000
Hambrecht & Quist Group. 35,000 24,624 12,200
H&Q: London Ventures.... 35,000 21,974 10,900
Charles Simony.......... 71,166 35,000
New Jersey Wolfson
Trust.................. 68,790 33,800
J.F. Shea Co., Inc...... 100,748 50,000
</TABLE>

Upon the closing of the Company's initial public offering on August 6, 1996,
all outstanding shares of Preferred Stock automatically converted into an
aggregate of 1,148,442 shares of Common Stock and all warrants to purchase
Preferred Stock became exercisable for an equivalent number of shares of
Common Stock at an identical per share exercise price.

44
<PAGE>

In February 1996, Edward M. Esber, Jr., Chief Executive Officer, President,
Director, and the Company, entered into a Restricted Stock Purchase Agreement
pursuant to which Mr. Esber bought 140,000 shares of the Company's Common
Stock, at a price of $0.50 per share. These shares are subject to repurchase
by the Company, at the original $0.50 purchase price per share, upon Mr.
Esber's cessation of service prior to vesting in those shares. In conjunction
with the share purchase, the Company loaned $70,000 to Mr. Esber pursuant to a
promissory note secured by the 140,000 shares of restricted Common Stock
purchased by Mr. Esber. As of June 30, 1997, Mr. Esber still owes
approximately $3,400 on this promissory note. Mr. Esber serves pursuant to an
employment agreement under which he is entitled to severance payments. See
"Principal Shareholders" and "Executive Compensation."

In February 1996, Bass Associates and the Company entered into a Restricted
Stock Purchase Agreement pursuant to which Bass Associates bought 11,000
shares of the Company's Common Stock, at a price of $0.50 per share. Charlie
Bass, the Chairman of the Board of Directors, is the General Partner of Bass
Associates. These shares are subject to repurchase by the Company, at the
original $0.50 price per share, upon Dr. Bass's cessation of service prior to
vesting in these shares.

In February 1996, Arthur G. Chang, Chief Operating Officer, and the Company,
entered into a Restricted Stock Purchase Agreement pursuant to which Mr. Chang
bought 75,000 shares of the Company's Common Stock, at a price of $0.50 per
share, pursuant to the Incentive Plan. These shares are subject to repurchase
by the Company, at the original $0.50 purchase price per share, upon Mr.
Chang's cessation of service prior to vesting in those shares. In conjunction
with the share purchase, the Company loaned $37,500 to Mr. Chang pursuant to a
promissory note secured by the 75,000 shares of restricted Common Stock
purchased by Mr. Chang. Mr. Chang still owes $37,500 on this promissory note.

In April 1996, the Board of Directors approved a sale of 60,000 shares of
the Company's Common Stock at a price of $0.50 per share to Mr. Esber pursuant
to a Restricted Stock Purchase Agreement. In May 1996, Mr. Esber executed the
Restricted Stock Purchase Agreement pursuant to which the shares are subject
to repurchase by the Company, at the original $0.50 purchase price per share,
upon Mr. Esber's cessation of service prior to vesting in those shares. In
conjunction with the share purchase, the Company loaned $30,000 to Mr. Esber
pursuant to a promissory note secured by the 60,000 shares of restricted
Common Stock purchased by Mr. Esber. As of June 30, 1997, Mr. Esber still owes
$30,000 on this promissory note.

In April 1996, the Board of Directors approved the sale of 40,000 shares of
the Company's Common Stock at a price of $0.50 per share to Mr. Chang pursuant
to a Restricted Stock Purchase Agreement. In May 1996, Mr. Chang executed the
Restricted Stock Purchase Agreement pursuant to which the shares are subject
to repurchase by the Company, at the original $0.50 purchase price per share,
upon Mr. Chang's cessation of service prior to vesting in those shares. In
conjunction with the share purchase, the Company loaned $20,000 to Mr. Chang
pursuant to a promissory note secured by the 40,000 shares of restricted
Common Stock purchased by Mr. Chang. As of June 30, 1997, Mr. Chang still owes
$20,000 on this promissory note.

In June 1996, the Company issued $1,000,000 and $500,000 in principal amount
of the Convertible Notes to 4C Ventures and Ameritech, respectively. The
Convertible Notes were automatically converted into 302,544 shares of Common
Stock upon the closing of the Company's initial public offering in August
1996. In connection therewith, the Company granted such parties warrants to
purchase an aggregate of 60,000 shares of Common Stock at a per share exercise
price of $5.00. In addition, the Company granted to each of 4C Ventures and
Ameritech the right to nominate one member of the Board of Directors as long
as they respectively own more than 3% of the outstanding Common Stock of the
Company. Certain principal shareholders of the Company have agreed to vote in
favor of such nominees.

In March 1997, pursuant to his employment agreement, Mr. Esber elected to
forgive $45,000 of indebtedness to the Company incurred to purchase stock, in
lieu of a $30,000 cash bonus for his performance in 1996. In April 1997 Mr.
Esber elected to have the Company forgive $27,000 of his indebtedness to the
Company incurred to purchase stock, as a one time discretionary bonus, in lieu
of a proposed $18,000 increase in base salary.

45
<PAGE>

The Company's initial public offering was underwritten by and this Offering
is being underwritten by the Underwriter, a firm that also serves as a market
maker with regard to the Company's Common Stock. Patrick Grady, a director of
the Company, serves as the Managing Director, Venture Capital of the
Underwriter. In addition to the underwriting discount of $675,000 in
connection with the Company's initial public offering, the Company paid the
Underwriter a non-accountable expense allowance of $202,500 and $10,000
related to the publishing of a "tombstone" notice. In addition, in connection
with the Company's initial public offering, the Company issued to the
Underwriter a warrant to purchase up to 135,000 shares of the Company's Common
Stock at a price of $6.00 per share at any time during the four-year period
commencing on August 6, 1997.

Unless otherwise indicated, transactions with affiliates have been made on
terms no less favorable to the Company than those available from unaffiliated
parties. In the future, the Company will continue to seek the most favorable
terms available from both affiliates and nonaffiliates.

46
<PAGE>

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of September
30, 1997 by (i) each shareholder known by the Company to be the beneficial
owner of more than 4.7% of the Company's Common Stock, (ii) each director,
(iii) the Company's Chief Executive Officer and each of the other executive
officers of the Company other than the Chief Executive Officer whose total
salary and bonus for fiscal year 1996 exceeded $100,000 (together, the Named
Officers) and (iv) all executive officers and directors as a group.

<TABLE>
<CAPTION>
PERCENTAGE
BENEFICIALLY OWNED(2)
------------------------
BEFORE AFTER
NAME OF BENEFICIAL OWNER(1) NUMBER OF SHARES OFFERING OFFERING
- --------------------------- ---------------- ----------- ----------
<S> <C> <C> <C>
Bass Associates (3)(4)............. 405,383 11.5% 4.3%
435 Tasso Street, Suite 325
Palo Alto, CA 94301
4C Ventures, L.P. (4)(5)........... 242,606 6.8% 2.5%
c/o Queensgate Bank & Trust Co.,
Ltd.
P.O. Box 30464
Ugland House
South Church Street
Grand Cayman
Cayman Islands, BWI
Hambrecht & Quist (6).............. 169,698 4.8% 1.8%
One Bush Street
San Francisco, CA 94104
Ameritech Development Corporation 240,807 6.8% 2.5%
(4)(7)............................
30 South Wacker Drive
Chicago, IL 60606
Edward M. Esber, Jr. (4)(8)........ 200,010 5.7% 2.1%
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95030
Arthur G. Chang (4)(9)............. 115,000 3.3% 1.2%
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95030
Giuliano Raviola (10).............. 242,606 6.8% 2.5%
c/o Queensgate Bank & Trust Co.,
Ltd.
P.O. Box 30464
Ugland House
South Church Street
Grand Cayman
Cayman Islands, BWI
Charles Ross (11).................. 750 * *
Ameritech Development Corporation
30 South Wacker Drive
Chicago, IL 60606
Ronald J. Tchorzewski.............. -- * *
c/o SoloPoint, Inc.
130-B Knowles Dr.
Los Gatos, CA 95030
</TABLE>

47
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED(2)
-----------------------
FIVE PERCENT SHAREHOLDERS, NUMBER OF SHARES BEFORE AFTER
DIRECTORS AND EXECUTIVE OFFICERS(1) BENEFICIALLY OWNED OFFERING OFFERING
- ----------------------------------- ------------------ ---------- ----------
<S> <C> <C> <C>
Patrick Grady (12)................ 750 * *
H.J. Meyers & Co., Inc.
433 California Street, Suite 300
San Francisco, CA 94104
Charlie Bass (13)................. 405,383 11.5% 4.3%
435 Tasso Street, Suite 325
Palo Alto, CA 94301
All directors and officers as a
group (7 persons) (14)........... 964,499 27.0% 10.1%
</TABLE>
- --------
* Less than 1%

(1) To the Company's knowledge, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes to this
table.

(2) Percentage ownership is based on: (i) before the Offering, 3,505,818
shares of Common Stock outstanding as of September 30, 1997 and any
shares issuable pursuant to securities convertible into or exercisable
for shares of Common Stock by the person or group in question on
September 30, 1997 or within 60 days thereafter; and (ii) after the
Offering, an additional 6,000,000 shares to be issued by the Company in
the Offering.
(3) Includes warrants to purchase 30,628 shares of Common Stock exercisable
on September 30, 1997 or within 60 days thereafter. Dr. Bass is the
controlling General Partner of Bass Associates and may be deemed to share
voting and investment power with respect to those shares. However, Dr.
Bass disclaims beneficial ownership of shares owned by Bass Associates
except to the extent of his pecuniary interest.
(4) In connection with the issuance of the certain convertible notes, the
Company has agreed to grant to each of 4C Ventures and Ameritech the
right to nominate one member of the Board of Directors so long as they
respectively own more than 3% of the outstanding Common Stock of the
Company. These shareholders by a Voting Agreement dated July 14, 1996
have agreed to vote in favor of such nominees. See "Certain Relationships
and Related Transactions."
(5) Includes warrants to purchase 40,000 shares of Common Stock exercisable
on September 30, 1997 or within 60 days thereafter.
(6) Includes warrants to purchase 23,100 shares of Common Stock exercisable
on September 30, 1997 or within 60 days thereafter and excludes 30,000
shares held by the Wegbreit Trust. Ben Wegbreit is a partner of H&Q
London Ventures; Hambrecht & Quist disclaims beneficial ownership of
shares owned by the Wegbreit Trust. H&Q London Ventures is an affiliate
of Hambrecht and Quist Group.
(7) Includes warrants to purchase 36,000 shares of Common Stock exercisable
on September 30, 1997 or within 60 days thereafter. Ameritech Development
Corporation is a subsidiary of Ameritech Corporation.
(8) 200,000 of Mr. Esber's shares are subject to repurchase options granted
to the Company under two separate agreements. The first agreement grants
the Company an option to repurchase 140,000 of Mr. Esber's shares within
90 days following the termination of Mr. Esber's employment with the
Company. Under the agreement, one-fourth (35,000) of the shares were
released from the repurchase option on October 26, 1996, and one-forty-
eighth (approximately 2,917) of the shares were released from the
repurchase option on November 26, 1996 and one-forty-eighth of the share
will be released on the twenty-sixth day of each month thereafter until
all of the shares were released. In the event of a Change of Control of
the Company (as defined in the agreement), an additional number of shares
equal to one-half of the number of shares that have not been released
from the Company's repurchase option as of the closing of such Change in
Control shall become immediately exercisable on the consummation of such
Change in Control. The second agreement grants the Company an option to
repurchase the remaining 60,000 shares within 90 days following the
termination of Mr. Esber's employment with the Company. Under the
agreement, one-forty-eighth (1,250) of the shares were released on June
1, 1996, and an additional one-

48
<PAGE>

forty-eighth of the shares are to be released on the first day of each
month thereafter until all of the shares have been released. The second
agreement contains identical Change of Control provisions as the agreement
governing the aforementioned 140,000 shares.
(9) Mr. Chang's shares are subject to repurchase options granted to the
Company under two separate agreements. The first agreement grants the
Company an option to repurchase 75,000 of Mr. Chang's shares within 90
days following the termination of Mr. Chang's employment with the
Company. Under the agreement, one-fourth (18,750) of the shares will be
released from the repurchase option upon the earliest of (i) January 1,
1997, or (ii) following an equity financing of the Company of at least $3
million, the voluntary termination by Mr. Chang of his employment with
the Company or the termination of Mr. Chang's employment by the Company
without cause (as defined in the agreement). One-forty-eighth
(approximately 1,563) of the shares were released from the repurchase
option on February 1, 1997 and on the first day of each month thereafter
until all of the shares have been released. In the event of a Change of
Control of the Company (as defined in the agreement), an additional
number of shares equal to one-half of the number of shares that have not
been released from the Company's repurchase option as of the closing of
such Change in Control shall become immediately exercisable on the
consummation of such Change in Control. The second agreement grants the
Company an option to repurchase the remaining 40,000 shares within 90
days following the termination of Mr. Chang's employment with the
Company. Under the agreement, one-forty-eighth (approximately 833) of the
shares were released on June 1, 1996, and an additional one-forty-eighth
of the shares will be released on the first day of each month thereafter
until all shares have been released. The second agreement contains
identical Change of Control provisions as the agreement governing the
aforementioned 75,000 shares.
(10) Mr. Raviola, a director of the Company, is a Limited Partner of 4C
Associates, L.P., which is the General Partner of 4C Ventures, L.P. Mr.
Raviola may be deemed to be the beneficial owner of shares owned by 4C
Ventures, L.P. Mr. Raviola is 4C Ventures' nominee to the Board of
Directors pursuant to agreement with the Company. See "Certain
Relationships and Related Transactions."
(11) Mr. Ross, a director of the Company, is Ameritech's nominee to the Board
of Directors pursuant to agreement with the Company. See "Certain
Relationships and Related Transactions."
(12) Mr. Grady, a director of the Company, is H.J. Meyers & Co., Inc.'s
nominee to the Board of Directors pursuant to agreement with the Company.
See "Certain Relationships and Related Transactions."
(13) Dr. Bass, a director of the Company, is the controlling General Partner
of Bass Associates and may be deemed to share voting and investment power
with respect to those shares. However, Dr. Bass disclaims beneficial
ownership of shares owned by Bass Associates except to the extent of his
pecuniary interest therein. Includes warrants to purchase 30,628 shares
of Common Stock issued to Bass Associates exercisable on September 30,
1997 or within 60 days thereafter.
(14) Includes warrants to purchase 70,628 shares of Common Stock and 3,000
shares subject to stock options exercisable on September 30, 1997 or
within 60 days thereafter.

49
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 35,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock.

COMMON STOCK

As of September 30, 1997, there were approximately 3,505,818 shares of
Common Stock outstanding held by approximately 108 shareholders of record.
There will be 9,505,818 shares of Common Stock outstanding after giving effect
to the sale of the shares of Common Stock offered hereby. The holders of
Common Stock are entitled to one vote per share on all matters to be voted on
by stockholders. Subject to preferences that may be applicable to any
outstanding Preferred Stock, if any, the holders of Common Stock are entitled
to receive ratably such dividends, if any, as may be declared from time to
time by the Board of Directors in its discretion out of funds legally
available therefor. See "Dividend Policy." In the even of a liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of
liabilities, subject to prior rights of Preferred Stock, if any, then
outstanding. The Common Stock has no preemptive or other subscription rights
and there are no conversion rights or redemption or sinking fund provisions
with respect to such shares. All of the outstanding shares of Common Stock are
fully paid and nonassessable.

WARRANTS

In connection with the Company's initial public offering, the Company issued
to H.J. Meyers & Co., Inc., the underwriter of such offering, a warrant to
purchase a maximum of 135,000 shares of Common Stock. This warrant becomes
exercisable for a four-year period commencing August 6, 1997. The exercise
price of this warrant is $6.00 per share. The warrant contains anti-dilution
provisions providing adjustment in the event of any recapitalization, stock
dividend, stock split or similar transaction. The warrant does not entitle
H.J. Meyers & Co., Inc. to any rights as a shareholder of the Company until
such warrant is exercised and shares are purchased thereunder. The warrant and
the shares of Common Stock thereunder may not be offered for sale except in
compliance with the applicable provisions of the Securities Act. The Company
has agreed that, if it shall cause to be filed with the Securities and
Exchange Commission a registration statement, the Underwriter shall have the
right during the four-year period commencing on August 6, 1996 to include in
such registration statement the warrant and the shares of Common Stock
issuable upon its exercise at no expense to the Underwriter. Additionally, the
Company has agreed that, upon written request by a holder or holders of 50% or
more of the warrant which is made during the exercise period of the warrant,
the Company will, on two separate occasions, register the warrant and the
shares of Common Stock issuable upon exercise thereof. The initial such
registration will be at the Company's expense and the second such registration
will be at the expense of the holder(s) of the warrant.

At the closing of this Offering, the Company will issue to the Underwriter
the Underwriter's Warrant to purchase for investment a maximum of 600,000
shares of Common Stock. The Underwriter's Warrant will be exercisable for a
four-year period commencing one year from the date of this Prospectus. The
exercise price of the Underwriter's Warrant is $1.75 per share (assuming a
public offering price of $1.25 per share). The Underwriter's Warrant will
contain anti-dilution provisions. The Underwriter's Warrant does not entitle
the Underwriter to any rights as a shareholder of the Company until such
Warrant is exercised and shares are purchased thereunder. The Underwriter's
Warrant and the shares of Common Stock thereunder may not be offered for sale
except in compliance with the applicable provisions of the Securities Act. The
Company has agreed that, if it shall cause to be filed with the Securities and
Exchange Commission either an amendment to the Registration Statement of which
this Prospectus is a part or a separate registration statement, the
Underwriter shall have the right during the four-year period commencing on the
date of this Prospectus to include in such amendment or Registration Statement
the Underwriter's Warrant and the shares of Common Stock issuable upon

50
<PAGE>

its exercise at no expense to the Underwriter. Additionally, the Company has
agreed that, upon written request by a holder or holders of 50% or more of the
Underwriter's Warrant which is made during the exercise period of the
Underwriter's Warrant, the Company will, on two separate occasions, register
the Underwriter's Warrant and the shares of Common Stock issuable upon
exercise thereof. The initial such registration will be at the Company's
expense and the second registration will be at the expense of the holder(s) of
the Underwriter's Warrant.

In June 1996, the Company granted 4C Ventures and Ameritech warrants to
purchase an aggregate of 60,000 shares of Common Stock at a per share exercise
price of $5.00. In addition, as of September 30, 1997, there were outstanding
warrants for (i) 8,570 shares of Common Stock at an exercise price of $3.50
per share, and (ii) 250,670 shares of Common Stock at an exercise price of
$5.00 per share, and (iii) 135,000 shares of Common Stock at an exercise price
of $6.00 per share.

REGISTRATION RIGHTS

Holders of approximately 1,450,986 shares of Common Stock ("Registrable
Securities") will be entitled to certain rights with respect to the
registration of such shares under the Securities Act. If the Company proposes
to register any of its securities under the Securities Act for its own
account, holders of Registrable Securities will be entitled to notice of such
registration and are entitled to include Registrable Securities therein,
provided, among other conditions, that the underwriters of any such offering
have the right to limit the number of shares included in such registration.
The Company is not obligated to effect more than two of these shareholder-
initiated registrations. Further, holders of Registrable Securities may
require the Company to file additional registration statements on Form S-3,
subject to certain conditions and limitations. The officers, directors and
affiliates of the Company who purchased shares and warrants in the Private
Placement Transactions are included in the shareholders of Registrable
Securities. See "Certain Relationships and Related Transactions."

In addition, the Company granted 4C Ventures and Ameritech, the holders of
an aggregate total of 302,544 shares of the Registrable Securities, certain
rights with respect to the registration of the Common Stock. Further, the
Company has agreed that, thereafter to the extent necessary to permit resale
of such Common Stock, the Company shall use its best efforts to maintain the
effectiveness of such registration statement and keep current the prospectus
included therein until the Company is satisfied that Rule 144(k) is available
for the resale by the then-current holders of such Common Stock.

The Company has also granted registration rights to the holder of the
warrant issued to H.J. Meyers & Co., Inc. in connection with the Company's
initial public offering and to the holder of the Underwriter's Warrant, which
provide such holders with certain rights to register the shares of Common
Stock underlying the such Warrants. See "Description of Capital Stock--
Warrants" and "Underwriting."

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services.

51
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of substantial amounts of Common Stock in the public market or
the perception that such sales could occur could materially adversely affect
the market price of the Common Stock and the ability of the Company to raise
capital in the future.

Upon completion of this Offering, the Company will have outstanding
9,505,818 shares of Common Stock, assuming no exercise of the Underwriter's
over-allotment option, the Underwriter's Warrant and no exercise of
outstanding options or warrants. The 6,000,000 shares of Common Stock that are
sold by the Company to the public in this Offering and an additional 1,350,000
shares sold in the Company's initial public offering will be freely tradeable
without restriction under the Securities Act, unless purchased by "affiliates"
of the Company as that term is defined in Rule 144 under the Securities Act.
An additional 591,441 shares are eligible for sale in the public market
following the closing of this Offering, subject in certain cases to certain
volume and resale restrictions under Rule 144.

Of the remaining 2,138,461 Restricted Shares outstanding upon completion of
this Offering, 1,541,372 shares are subject to lock-up agreements expiring on
August 6, 1998, providing that the holders of such shares will not offer,
sell, contract to sell or grant any option to purchase or otherwise dispose of
the shares of stock owned by them or that could be purchased by them through
the exercise of options to purchase stock of the Company without the prior
written consent of the Underwriter.

For twelve months from the closing of this Offering, the Company has agreed
that it will not sell or otherwise dispose of any securities without the prior
written consent of the Underwriter, which consent shall not be unreasonably
withheld, with the exception of (i) shares issued pursuant to the exercise of
options, warrants or other convertible securities outstanding prior to the
closing of this Offering, (ii) shares issued pursuant to the Company's
incentive stock plans to officers, directors, employees and consultants or
(iii) shares issued pursuant to strategic alliance or corporate partnership
transactions at a price per share equal to the average closing bid price of
the Company's Common Stock as quoted on the Nasdaq Small Cap Market for the
ten-day trading period prior to the date of the closing of such transaction.
For twenty-four months from the closing of this Offering, the Company has
agreed not to sell or issue any securities pursuant to Regulation S or
Regulation D, or securities at a discount to market or in a discounted
transaction, under the Securities Act without the Underwriter's prior written
consent.

The Company has filed registration statements on Form S-8 under the
Securities Act covering 775,170 shares of Common Stock reserved for issuance
under the Stock Plan. Accordingly, shares registered under such registration
statements are, subject to Rule 144 volume limitations applicable to
affiliates of the Company, available for sale in the open market, subject to
vesting restrictions and the lock-up agreements described above. See
"Management--Benefit Plans."

As of September 30, 1997, the Company has issued warrants to purchase
454,240 shares of Common Stock, and will issue the Underwriter's Warrant to
purchase up to 600,000 shares of Common Stock upon the closing of this
Offering.

52
<PAGE>

UNDERWRITING

The Underwriter has agreed, subject to the terms and conditions of the
Underwriting Agreement between the Company and the Underwriter, to purchase
from the Company 6,000,000 shares of Common Stock. The underwriting discount
set forth on the cover page of this Prospectus will be allowed to the
Underwriter at the time of delivery to the Underwriter of the shares so
purchased.

<TABLE>
<CAPTION>
NUMBER OF
SHARES TO BE
NAME OF UNDERWRITER PURCHASED
- ------------------- ------------
<S> <C>
H. J. Meyers & Co., Inc............................................ 6,000,000
</TABLE>

The Underwriter has advised the Company that they propose to offer the
shares to the public at an offering price of $ per Share and that the
Underwriter may allow certain dealers who are members of the National
Association of Securities Dealers ("NASD") a concession of not in excess of
$ per Share. After commencement of the Offering, the public offering price
and concession may be changed.

The Company has granted to the Underwriter an option, exercisable during the
45 business-day period from the date of this Prospectus, to purchase up to a
maximum of 900,000 additional shares on the same terms set forth above. The
Underwriter may exercise such rights only to satisfy over-allotment in the
sale of the shares.

The Company has agreed to pay to Underwriter a non-accountable expense equal
to 3% of the total proceeds of the Offering, or $225,000 at an assumed public
offering price of $1.25 ($258,750 if the Underwriter exercises the over-
allotment option in full). In addition to the Underwriter's commission and the
Underwriter's non-accountable expense allowance, the Company is required to
pay the costs of qualifying the shares of Common Stock, under federal and
state securities laws, together with legal and accounting fees, printing and
other costs in connection with this Offering, estimated to total approximately
$575,000.

At the closing of this Offering, the Company will issue to the Underwriter
the Underwriter's Warrant to purchase for investment a maximum of 600,000
shares of Common Stock. The Underwriter's Warrant and the underlying shares
are being registered by means of the Registration Statement of which this
Prospectus forms a part. The Underwriter's Warrant will be exercisable for a
four year period commencing one year from the date of this Prospectus. The
exercise price of the Underwriter's Warrant will be $1.75 per share (assuming
a public offering price of $1.25 per share). The Underwriter's Warrant will be
restricted from sale, assignment, transfer or hypothecation prior to its
exercise date except to officers of the Underwriter and members of the selling
group and officers and partners thereof. The Underwriter's Warrant will
contain anti-dilution provisions. The Underwriter's Warrant does not entitle
the Underwriter to any rights as a shareholder of the Company until such
Warrant is exercised and the shares of Common Stock are purchased thereunder.
The Underwriter's Warrant and the shares of Common Stock thereunder may not be
offered for sale except in compliance with the applicable provisions of the
Securities Act.

The Company has agreed that, if it shall cause to be filed with the
Commission either an amendment to the Registration Statement of which this
Prospectus is a part or a separate registration statement, the Underwriter
shall have the right during the five-year period commencing on the date of
this Prospectus to include in such amendment or Registration Statement the
Underwriter's Warrant and the Company has agreed that, upon written request by
a holder or holders of 50% or more of the Underwriter's Warrant which is made
during the exercise period of the Underwriter's Warrant, the Company will on
two separate occasions, register the Underwriter's Warrant and the shares of
Common Stock issuable upon exercise thereof. The initial such registration
will be at the Company's expense and the second such registration will be at
the expense of the holder(s) of the Underwriter's Warrant.

For the period during which the Underwriter's Warrant is exercisable, the
holder or holders will have the opportunity to profit from a rise in the
market value of the Company's Common Stock, with a resulting dilution

53
<PAGE>

in the interests of the other shareholders of the Company. The holder or
holders of the Underwriter's Warrant can be expected to exercise it at a time
when the Company would, in all likelihood, be able to obtain any needed
capital from an offering of its unissued Common Stock on terms more favorable
to the Company than those provided for in the Underwriter's Warrant. Such
facts may materially adversely affect the terms on which the Company can
obtain additional financing. To the extent that the Underwriter realizes any
gain from the resale of the Underwriter's Warrant or the securities issuable
thereunder, such gain may be deemed additional underwriting compensation under
the Securities Act.

The Company has agreed to enter into a consulting agreement with the
Underwriter under the terms of which the Underwriter has agreed to perform
consulting services related to corporate finance and will be paid a non-
refundable fee of $6,000 per month for 12 months. The Company has agreed to
pay the Underwriter the entire one year fee upon the closing of this Offering.

Directors and officers of the Company are expected to be subject to lock-up
agreements under which they will agree not to sell or dispose of any shares of
Common Stock issued to them directly by the Company, for a period of 12 months
after the date of this Prospectus, without prior written consent of the
Underwriter.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection
with the Registration Statement, including liabilities under the Securities
Act.

The Company's initial public offering was underwritten by the Underwriter,
and the Underwriter also serves as a market maker with regard to the Company's
Common Stock. Patrick Grady, a director of the Company, serves as the Managing
Director, Venture Capital of the Underwriter. In addition to an underwriting
discount of $675,000, in connection with the Company's initial public
offering, the Company paid the Underwriter a non-accountable expense allowance
of $202,500 and $10,000 related to the publishing of a "tombstone" notice. In
addition, in connection with the Company's initial public offering, the
Company issued to the Underwriter a warrant to purchase up to 135,000 shares
of the Company's Common Stock at a price of $6.00 per share at any time during
the four-year period commencing on August 6, 1997.

In connection with its initial public offering, the Company agreed that
until June 1999, the Underwriter shall have the right to designate one member
to the Company's Board of Directors, provided that the designee is acceptable
to the Company. Patrick Grady is the current designee of the Underwriter
pursuant to this agreement. In connection with this Offering, the Company has
agreed with the Underwriter that Mr. Grady, or any successors designated by
him, will continue to serve on the Company's Board of Directors, subject to
shareholder approval, until the date that is 36 months from the closing of
this Offering.

54
<PAGE>

adverse effect on the market price of the Company's Common Stock. The Company
believes that the Chicago office of the Securities and Exchange Commission is
conducting a private, nonpublic investigation of H.J. Meyers & Co., Inc., the
Underwriter and the principal market maker in the Company's Common Stock,
pursuant to a Formal Order of Investigation issued by the Commission as to
whether the Underwriter may have violated applicable securities laws and the
rules and regulations thereunder, with respect to sales of certain securities.
The Company is currently unable to assess the potential impact of the outcome
of the Staff's investigation on the Underwriters ability to make a market in
the Company's Common Stock or this Offering.

In connection with the Offering, the Underwriter may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Specifically, the Underwriter may over allot the Offering, creating a
syndicate short position. In addition, the Underwriter may bid for and
purchase shares of Common Stock in the open market to cover syndicate short
positions or to stabilize the price of the Common Stock. Finally, the
underwriting syndicate may reclaim selling concessions from syndicate members
in the Offering, if the syndicate repurchases previously distributed Common
Stock in syndicate covering transactions, in stabilizing transactions or
otherwise. Any of these activities may stabilize or maintain the market price
of the Common Stock above independent market levels. The Underwriter is not
required to engage in these activities, and may end any of the activities at
any time.

The Underwriter has advised the Company that the Underwriter does not intend
to confirm sales to any account over which they exercise discretionary
authority.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. As of the date of this Prospectus, Wilson Sonsini Goodrich &
Rosati beneficially owns 5,782 shares of the Common Stock of the Company.
Certain legal matters in connection with the Offering will be passed upon for
the Underwriter by Freshman, Marantz, Orlanski, Cooper & Klein, a law
corporation, Beverly Hills, California.

EXPERTS

The financial statements of SoloPoint, Inc. at December 31, 1995 and 1996,
and for the years then ended and the period from March 26, 1993 (Inception)
through December 31, 1996, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

55
<PAGE>

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Company's Common
Stock is quoted for trading on the Nasdaq SmallCap Market and reports, proxy
statements and other information concerning the Company may also be inspected
at the offices of the National Association of Securities Dealers, 1735 K
Street, N. W., Washington, D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
SB-2 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, omits
certain of the information contained in the Registration Statement and the
exhibits and schedules thereto on file with the Securities and Exchange
Commission pursuant to the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder. For further information with
respect to the Company and the shares of Common Stock, reference is made to
the Registration Statement and the exhibits and schedules thereto. The
Registration Statement, including exhibits thereto, as well as the Company's
Exchange Act filings, may be inspected and copied at the public reference
facilitates maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's Regional
Offices at 75 Park Place, Room 1400, New York, New York 10007 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and copies may be obtained at the prescribed rates from the Public Reference
Section of the Commission at its principal office in Washington, D.C.
Statements contained in the Prospectus as to the contents of such contract of
other document filed as a exhibit to the Registration Statement, each such
statement being qualified in its entirety by such reference. The Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission. The address of the site is
http://www.sec.gov.

56
<PAGE>

SOLOPOINT, INC.

INDEX TO FINANCIAL STATEMENTS

CONTENTS

<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors.......................... F-2
Audited Financial Statements
Balance Sheets............................................................ F-3
Statements of Operations.................................................. F-4
Statements of Redeemable Convertible Preferred Stock and Shareholders'
Equity (Net Capital Deficiency).......................................... F-5
Statements of Cash Flows.................................................. F-7
Notes to Financial Statements............................................. F-8
</TABLE>

F-1
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Shareholders
SoloPoint, Inc.

We have audited the accompanying balance sheets of SoloPoint, Inc. (a
development stage company, formerly SoHo Communications, Inc.) as of December
31, 1995 and 1996 and the related statements of operations, redeemable
convertible preferred stock and shareholders' equity (net capital deficiency)
and cash flows for the years then ended and for the period from inception
(March 26, 1993) to December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SoloPoint, Inc. (a
development stage company) at December 31, 1995 and 1996, and the results of
its operations and its cash flows for the years then ended and for the period
from inception (March 26, 1993) to December 31, 1996, in conformity with
generally accepted accounting principles.

/s/ Ernst & Young LLP

Palo Alto, California
February 10, 1997

F-2
<PAGE>

SOLOPOINT, INC.
(a development stage company)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1995 1996 1997
----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash................................. $ 331,017 $ 4,066,825 $ 620,855
Accounts receivable, net of
allowances of $20,777 and $85,986 at
December 31, 1996 and September 30,
1997 (unaudited), respectively...... -- 327,916 281,040
Inventories.......................... 356,194 835,254 1,025,326
Other current assets................. 11,671 39,330 233,737
----------- ----------- -----------
Total current assets.................. 698,882 5,269,325 2,160,958
Furniture and equipment, at cost:
Computers and software............... 128,994 231,479 275,150
Furniture and fixtures............... 147,156 148,944 203,609
----------- ----------- -----------
276,150 380,423 478,759
Accumulated depreciation and
amortization........................ 99,609 205,165 292,727
----------- ----------- -----------
176,541 175,258 186,032
Deposits and other assets............. 28,000 37,997 37,997
Notes receivable from shareholder..... 35,000 -- --
----------- ----------- -----------
Total assets.......................... $ 938,423 $ 5,482,580 $ 2,384,987
=========== =========== ===========
LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND SHAREHOLDERS'
EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable..................... $ 350,712 $ 299,926 $ 327,099
Accrued compensation................. 23,853 137,872 76,586
Convertible notes payable to
shareholders........................ 1,120,000 -- --
Convertible notes payable............ 313,000 -- --
Notes payable, current portion....... 9,710 39,594 28,066
Other accrued liabilities............ -- 3,787 42,111
----------- ----------- -----------
Total current liabilities............. 1,817,275 481,179 473,862
Notes payable, non-current portion.... 91,400 140,165 119,952
Commitments and contingencies
Redeemable convertible preferred
stock, no par value:
Authorized shares--10,000,000 in
1995
Issued and outstanding shares--
599,585 in 1995, 0 in 1996 and at
September 30, 1997.................. 2,798,513 -- --
Shareholders' equity (net capital
deficiency):
Preferred stock, no par value:
Authorized shares--5,000,000 in 1996
and 1997
Issued and outstanding shares--see
redeemable convertible preferred
stock above
Common stock, no par value:
Authorized shares--35,000,000
Issued and outstanding shares--
425,164 in 1995, 3,499,780 in 1996
and 3,505,818 at September 30,
1997................................ 17,852 12,410,005 12,423,836
Deficit accumulated during the
development stage................... (3,786,617) (7,391,269) (10,547,163)
Notes receivable from shareholders... -- (157,500) (85,500)
----------- ----------- -----------
Total shareholders' equity (net
capital deficiency).................. (3,768,765) 4,861,236 1,791,173
----------- ----------- -----------
Total liabilities, redeemable
convertible preferred stock and
shareholders' equity.................. $ 938,423 $ 5,482,580 $ 2,384,987
=========== =========== ===========
</TABLE>

See accompanying notes.

F-3
<PAGE>

SOLOPOINT, INC.
(a development stage company)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
MARCH 26, 1993 MARCH 26, 1993
NINE MONTHS ENDED (INCEPTION) (INCEPTION)
YEAR ENDED DECEMBER 31, SEPTEMBER 30, THROUGH THROUGH
------------------------ ------------------------ DECEMBER 31, SEPTEMBER 30,
1995 1996 1996 1997 1996 1997
----------- ----------- ----------- ----------- -------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net revenues............ $ -- $ 380,113 $ 103,910 $ 366,566 $ 380,113 $ 746,679
Cost of sales........... -- 289,050 85,884 262,911 289,050 551,961
----------- ----------- ----------- ----------- ----------- ------------
Gross margin........... -- 91,063 18,026 103,655 91,063 194,718
Costs and expenses:
Research and
development........... 1,385,769 1,523,599 1,111,844 1,082,656 3,353,717 4,436,373
Sales and marketing.... 501,580 1,120,400 727,461 1,391,688 1,621,980 3,013,668
General and
administrative........ 777,123 1,117,974 799,572 827,511 2,542,390 3,369,901
----------- ----------- ----------- ----------- ----------- ------------
Loss from operations.... (2,664,472) (3,670,910) (2,620,851) (3,198,200) (7,427,024) (10,625,224)
Other income (expense):
Interest income........ 12,850 108,774 48,423 70,731 126,346 197,077
Other income........... 2,000 1,000 1,000 -- 3,000 3,000
Interest expense....... (22,857) (32,476) (28,684) (28,425) (60,473) (88,898)
----------- ----------- ----------- ----------- ----------- ------------
Net loss................ $(2,672,479) $(3,593,612) $(2,600,112) $(3,155,894) $(7,358,151) $(10,514,045)
=========== =========== =========== =========== =========== ============
Net loss per share...... $ (1.35) $ (1.46) $ (2.02) $ (.90)
=========== =========== =========== ===========
Shares used in computing
net loss per share..... 1,974,329 2,461,715 1,284,936 3,501,793
</TABLE>

See accompanying notes.

F-4
<PAGE>

SOLOPOINT, INC.
(a development stage company)
STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)

Common stock to be
issued in January
1994.................. -- -- -- 3,675 -- -- 3,675
Series A-1 redeemable
preferred stock to be
issued in January
1994.................. -- 250,000 -- -- -- -- --
Issuance of Series A-1
redeemable preferred
stock................. 25,000 -- -- -- -- -- --
Recapitalization
exchange of common
stock for Series A-1
redeemable preferred
stock at $.04 per
share................. 7,500 300 (300,000) (300) -- -- (300)
Issuance of Series A-1
redeemable preferred
stock in exchange for
services in January
1994 at $10.00 per
share................. 13 125 -- -- -- -- --
Issuance of common
stock from January
1994 through April
1994 at $.01 per
share................. -- -- 396,100 286 -- -- 286
Issuance of common
stock in exchange for
services, from
February 1994 through
October 1994 at prices
ranging from $.01 to
$.40 per share........ -- -- 16,870 4,935 -- -- 4,935
Issuance of Series A-2
redeemable preferred
stock in May 1994 at
$3.50 per share, less
issuance costs of
$8,653................ 78,571 266,347 -- -- -- -- --
Issuance of Series A-2
redeemable preferred
stock in May 1994 at
$3.50 per share in
exchange for interest
payable............... 956 3,345 -- -- -- -- --
Issuance of Series A-3
redeemable preferred
stock in July and
August of 1994 at
$4.00 per share, less
issuance costs of
$13,292............... 143,750 561,708 -- -- -- -- --
Issuance of Series A-4
redeemable preferred
stock in December 1994
at $4.50 per share,
less issuance costs of
$6,587................ 82,378 364,114 -- -- -- -- --
Net loss from inception
through December 31,
1994.................. -- -- -- -- (1,092,060) -- (1,092,060)
------- ---------- --------- ------- ----------- --------- -----------
Balance at December 31,
1994................... 338,168 1,445,939 412,970 8,896 (1,092,060) -- (1,083,164)
Issuance of common
stock in exchange for
services from January
1995 through December
1995 at prices ranging
from $.40 to $.50 per
share................. -- -- 14,086 6,873 -- -- 6,873
Issuance of common
stock from July 1995
through November 1995
at $.50 per share..... -- -- 2,400 1,200 -- -- 1,200
Exercise of stock
options............... -- -- 2,375 950 -- -- 950
Repurchase of common
stock................. -- -- (6,667) (67) -- -- (67)
Issuance of Series A-4
redeemable preferred
stock in January 1995
at $4.50 per share,
less issuance costs of
$3,583................ 18,417 79,295 -- -- -- -- --
Issuance of Series A-5
redeemable preferred
stock from March 1995
through May 1995 at
$5.00 per share, less
issuance costs of
$13,227............... 154,000 756,773 -- -- -- -- --
Issuance of Series A-6
redeemable preferred
stock in June 1995 at
$6.00 per share, less
issuance costs of
$15,572............... 85,000 494,428 -- -- -- -- --
Net loss............... -- -- -- -- (2,672,479) -- (2,672,479)
Accretion of redeemable
preferred stock....... -- 22,078 -- -- (22,078) -- (22,078)
------- ---------- --------- ------- ----------- --------- -----------
Balance at December 31,
1995................... 595,585 2,798,513 425,164 17,852 (3,786,617) (3,768,765)
</TABLE>

See accompanying notes.

F-5
<PAGE>

SOLOPOINT, INC.
(a development stage company)

STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)--(CONTINUED)

<TABLE>
<CAPTION>
REDEEMABLE DEFICIT TOTAL
CONVERTIBLE ACCUMULATED NOTES SHAREHOLDERS'
PREFERRED STOCK COMMON STOCK DURING THE RECEIVABLE EQUITY (NET
----------------------- ---------------------- DEVELOPMENT FROM CAPITAL
SHARES AMOUNT SHARES AMOUNT STAGE SHAREHOLDERS DEFICIENCY)
---------- ----------- --------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Exercise of stock
options............... -- $ -- 26,141 $ 11,281 $ -- $ -- $ 11,281
Repurchase of common
stock................. -- -- (52,813) (528) -- -- (528)
Conversion of A-6 to A-
7 redeemable preferred
stock................. 17,000 -- -- -- -- -- --
Issuance of common
stock at $.50 per
share................. -- -- 11,000 5,500 -- -- 5,500
Issuance of Series A-7
redeemable preferred
stock for bridge notes
in February 1996...... 286,600 1,433,000 -- -- -- -- --
Issuance of Series A-7
redeemable preferred
stock from February
1996 through March
1996 at $5.00 per
share, less issuance
costs of $18,843...... 239,500 1,178,657 -- -- -- -- --
Issuance of common
stock for notes
receivable............ -- -- 315,000 157,500 -- (157,500) --
Issuance of redeemable
preferred stock in
exchange for services
from January 1996
through July 1996..... 8,004 40,000 -- -- -- -- --
Issuance of Series A-7
redeemable preferred
stock in March 1996 at
$5.00 per share in
exchange for interest
payable............... 6,753 33,767 -- -- -- -- --
Accretion of redeemable
preferred stock....... -- 11,040 -- -- (11,040) -- (11,040)
Issuance of common
stock in exchange for
services for 1996..... -- -- 16,302 26,767 -- -- 26,767
Issuance of common
stock in exchange for
bridge note........... -- -- 300,000 1,500,000 -- -- 1,500,000
Issuance of common
stock in exchange for
interest associated
with bridge note...... -- -- 2,544 12,720 -- -- 12,720
Shares repurchased..... (5,000) (20,000) (42,000) (63,000) -- -- (63,000)
Conversion of
redeemable preferred
stock to common stock
upon public offering
in August 1996........ (1,148,442) (5,474,977) 1,148,442 5,474,977 -- -- 5,474,977
Issuance of common
stock upon the initial
public offering net of
issuance costs of
$1,483,064............ -- -- 1,350,000 5,266,936 -- -- 5,266,936
Net loss............... -- -- -- -- (3,593,612) -- (3,593,612)
---------- ----------- --------- ----------- ------------ -------- ------------
Balance at December 31,
1996................... -- -- 3,499,780 12,410,005 (7,391,269) (157,500) 4,861,236
Proceeds from note
receivable from
shareholder
(unaudited)........... -- -- -- -- -- 72,000 72,000
Issuance of common
stock in exchange for
services for 1997
(unaudited)........... -- -- 5,648 12,000 -- -- 12,000
Exercise of stock
options (unaudited)... -- -- 390 1,831 -- -- 1,831
Net loss (unaudited)... -- -- -- -- (3,155,894) -- (3,155,894)
---------- ----------- --------- ----------- ------------ -------- ------------
Balance at September 30,
1997 (unaudited)....... -- $ -- 3,505,818 $12,423,836 $(10,547,163) $(85,500) $(1,791,173)
========== =========== ========= =========== ============ ======== ============
</TABLE>

See accompanying notes.

F-6
<PAGE>

SOLOPOINT, INC.
(a development stage company)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD PERIOD FROM
MARCH 26, 1993 MARCH 26, 1993
YEAR ENDED NINE MONTHS ENDED (INCEPTION) (INCEPTION)
DECEMBER 31, SEPTEMBER 30, THROUGH THROUGH
------------------------ ------------------------ DECEMBER 31, SEPTEMBER 30,
1995 1996 1996 1997 1996 1997
----------- ----------- ----------- ----------- -------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................ $(2,672,479) $(3,593,612) $(2,600,112) $(3,155,894) $(7,358,151) $(10,514,045)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Common stock and
preferred stock issued
for services.......... 6,873 66,767 28,405 12,000 78,700 90,700
Preferred stock issued
for interest payable.. -- 46,487 33,767 -- 49,832 49,832
Depreciation and
amortization.......... 68,381 105,556 76,368 87,562 205,274 292,836
Changes in operating
assets and
liabilities:
Accounts receivable.... -- (327,916) (103,586) 46,876 (327,916) (281,040)
Inventories............ (356,194) (479,060) (249,108) (190,072) (835,254) (1,025,326)
Other current assets... (6,548) (23,872) (3,761) (194,407) (35,543) (229,950)
Accounts payable and
other................. 282,210 (50,786) 101,096 65,497 299,926 365,423
Accrued compensation... (151) 114,019 20,911 (61,286) 137,872 76,586
----------- ----------- ----------- ----------- ----------- ------------
Net cash used in
operating activities... (2,677,908) (4,142,417) (2,696,020) (3,389,724) (7,785,260) (11,174,984)
INVESTING ACTIVITIES
Acquisitions of
furniture and
equipment.............. (125,935) (104,273) (98,304) (98,336) (366,025) (464,361)
Loan to shareholder..... (35,000) -- -- -- (35,000) (35,000)
Payment received from
shareholder............ -- 1,500 1,500 -- 1,500 1,500
Deposits and other
assets................. (3,050) (9,997) -- -- (38,107) (38,107)
----------- ----------- ----------- ----------- ----------- ------------
Net cash used in
investing activities... (163,985) (112,770) (96,804) (98,336) (437,632) (535,968)
FINANCING ACTIVITIES
Proceeds from
convertible notes
payable to
shareholders........... 1,120,000 -- 1,120,000 1,120,000
Proceeds from
convertible notes
payable................ 313,000 1,500,000 1,500,000 -- 1,813,000 1,813,000
Proceeds from notes
payable................ 101,110 90,386 92,408 -- 191,496 191,496
Proceeds from notes
receivable from
shareholders........... -- -- -- 72,000 -- 72,000
Principal payments on
capital lease
obligations............ (8,996) (11,737) (6,621) (31,741) (26,134) (57,875)
Proceeds from sale of
preferred stock, net of
issuance costs......... 1,330,496 1,178,657 1,178,657 -- 3,951,622 3,951,622
Issuance of common
stock, net of
repurchases............ 2,083 5,233,689 5,256,322 1,831 5,239,733 5,241,564
----------- ----------- ----------- ----------- ----------- ------------
Net cash provided by
financing activities... 2,857,693 7,990,995 8,020,766 42,090 12,289,717 12,331,807
----------- ----------- ----------- ----------- ----------- ------------
Net increase (decrease)
in cash................ 15,800 3,735,808 5,227,942 (3,445,970) 4,066,825 620,855
Cash at beginning of
period................. 315,217 331,017 331,017 4,066,825 -- --
----------- ----------- ----------- ----------- ----------- ------------
Cash at end of period... $ 331,017 $ 4,066,825 $ 5,558,959 $ 620,855 $ 4,066,825 $ 620,855
=========== =========== =========== =========== =========== ============
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW
INFORMATION
Cash paid during the
period for:
Interest............... $ 2,080 $ 33,831 $ 11,658 $ 28,425 $ 39,866 $ 68,291
Income taxes........... $ 1,600 $ 800 $ 800 $ 800 $ 6,400 $ 7,200
SUPPLEMENTAL DISCLOSURES
OF NONCASH INVESTING
AND FINANCING
ACTIVITIES
Equipment acquired under
capital lease
financing.............. $ -- $ -- $ -- $ -- $ 14,397 $ 14,397
Conversion of preferred
stock to common stock.. $ 5,474,977 $ 5,474,977 $ -- $ 5,474,977 $ 5,474,977
Accretion of preferred
stock.................. $ 22,078 $ 11,040 $ 11,040 $ -- $ 33,118 $ 33,118
Common stock issued for
note receivable from
shareholder............ $ -- $ 157,500 $ 157,500 $ -- $ 157,500 $ 157,500
Common and preferred
stock forfeited for
note receivable........ $ -- $ 33,500 $ 33,500 $ -- $ 33,500 $ 33,500
Conversion of notes
payable to common
stock.................. $ -- $ 1,500,000 $ 1,500,000 $ -- $ 1,500,000 $ 1,500,000
Conversion of notes
payable to preferred
stock.................. $ -- $ 1,433,000 $ 1,433,000 $ -- $ 1,433,000 $ 1,433,000
</TABLE>

See accompanying notes.

F-7
<PAGE>

SOLOPOINT, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF SEPTEMBER 30, 1997 AND FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

SoloPoint, Inc. (the "Company") was incorporated on March 26, 1993. The
Company changed its name from SoHo Networks, Inc. to SoHo Communications, Inc.
in September 1993 and from SoHo Communications, Inc. to SoloPoint, Inc. in
October 1995. The Company designs, develops and markets personal
communications management solutions for communications dependent individuals.
Through December 31, 1995, the Company was active in product development,
financial planning, the acquisition of facilities and equipment, raising
capital and had begun to build inventory. The Company began shipping its first
product in March 1996 with its second product shipping in September 1996. Only
limited revenues have been realized through December 31, 1996; as a result,
the Company is still considered to be in the development stage.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Interim Financial Information

The financial statements as of September 30, 1997 and for the nine months
ended September 30, 1996 and 1997 are unaudited but reflect all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of financial position and
results of operations. Operating results for the nine months ended September
30, 1997 are not necessarily indicative of the results that may be expected
for the fiscal year ending December 31, 1997.

Inventories

Inventories consist principally of fabricated boards and integrated circuits
and are valued at the lower of cost (determined on the first-in, first-out
(FIFO) basis) or market. Realization of the value of inventories is dependent
upon the Company achieving adequate levels of revenues. Inventories consist of
the following:

<TABLE>
<CAPTION>
DECEMBER 31
----------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials................................... $183,049 $345,886 $ 567,131
Work-in-process................................. 142,427 355,236 233,681
Finished goods.................................. 30,718 134,132 224,514
-------- -------- ----------
$356,194 $835,254 $1,025,326
======== ======== ==========
</TABLE>

Furniture and Equipment

Furniture and equipment are stated at cost. Depreciation is computed using
the straight-line method over the assets' estimated useful lives of three to
five years.

Software Development Costs

The Company expenses software development costs incurred prior to
establishing technological feasibility as incurred. Software development
expenses that would be capitalized pursuant to Statement of Financial
Accounting Standards No. 86, "Software Development Costs," which have been
incurred after the product has reached technological feasibility have not been
material and, accordingly, have been charged to operations as incurred.

F-8
<PAGE>

SOLOPOINT, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

Revenue Recognition

Revenue is recognized when products are shipped and the 30-day money-back
guarantee period has lapsed. Allowances are provided for product returns based
on estimated future product returns, the timing of expected new product
introductions and other factors. These allowances are recorded as direct
reductions of revenue and accounts receivable. While the Company closely
monitors product returns to maintain appropriate allowances, actual product
returns may differ from the Company's estimates, and such differences may be
material to the financial statements.

Per Share Data

Net loss per share is computed using the weighted average number of shares
of common stock outstanding. Common equivalent shares from redeemable
convertible preferred stock and from stock options and warrants are not
included in the computation as they are antidilutive. In accordance with
Securities and Exchange Commission Staff Accounting Bulletins, common and
common equivalent shares issued by the Company at prices below the public
offering price during the period beginning one year prior to the initial
filing of the registration statement for the Company's initial public offering
have been included in the calculation as if they were outstanding for periods
prior to the initial public offering (using the treasury stock method and the
initial public offering price).

The 1995 calculation of net loss per share presented in the statement of
operations has been computed as described above and also gives effect to the
conversion of all outstanding shares of redeemable convertible preferred stock
into shares of common stock upon the closing of the Company's initial public
offering using the if-converted method.

NOTE 2. NOTES RECEIVABLE FROM SHAREHOLDER

The Company loaned $35,000 in cash to a shareholder in two installments in
November 1995. The notes were secured by common and redeemable convertible
preferred stock owned by the shareholder. Interest was payable bimonthly at 7%
per annum. Payments for these notes were received in August 1996 upon the
completion of the Company's initial public offering.

NOTE 3. NOTES PAYABLE

In December 1995, the Company borrowed $101,110 from Venture Lending and
Leasing pursuant to a promissory note. The note is secured by the Company's
furniture and equipment. The note is due in monthly installments of $2,841
with interest payable monthly and at specified dates at rates ranging from 12%
to 15.17%. In April 1996 and June 1996 the Company borrowed an additional
$45,193 and $45,193, respectively, from Venture Lending and Leasing pursuant
to promissory notes. The 1996 notes are secured by the Company's furniture and
equipment. The notes are due in monthly installments of $1,270 each with
interest payable monthly and at specific dates at a rate of 15.53%. In
connection with the loans, the Company issued to the lender a warrant to
purchase the Company's Series B redeemable convertible preferred stock in the
amount of $32,000 at a per share price equal to the most recent venture
capital equity financing after December 11, 1995. The redeemable convertible
preferred stock was converted to common stock and the warrants were converted
into warrants to purchase the same number of common shares at the completion
of the Company's initial public offering in August 1996.

F-9
<PAGE>

SOLOPOINT, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

Future maturities of notes payable for the years ended December 31 are as
follows:

In June 1996, the Company issued a total of $1,500,000 of convertible notes
to Ameritech and 4C Ventures. The notes accrued interest at 5.76% per annum
and were due on June 14, 1997. In connection with the issuance of these notes,
the Company also issued to the note holders warrants to purchase an aggregate
of 60,000 shares of the Company's common stock at an exercise price equal to
the Company's initial public offering price. Pursuant to the convertible notes
and warrant agreements, the Company appointed one representative from each of
the two convertible note holders to the Company's Board of Directors. These
notes were converted to 300,000 shares of common stock in connection with the
Company's initial public offering.

NOTE 4. CONVERTIBLE NOTES PAYABLE TO SHAREHOLDERS

In October and November 1995, the Company borrowed $1,120,000 from certain
existing preferred and common shareholders and $313,000 from others in
exchange for promissory notes and warrants to purchase $286,000 of the
Company's Series A-7 redeemable convertible preferred stock at an exercise
price per share equivalent to the Series A-7, redeemable convertible preferred
stock issuance price. The notes were unsecured with interest at 5.75% per
annum.

In February 1996, the notes were converted into 286,600 shares of Series A-7
redeemable convertible preferred stock (see Note 6). At the completion of the
Company's initial public offering, the warrants to purchase Series A-7
preferred stock were converted into warrants to purchase the same number of
common shares.

NOTE 5. INCOME TAXES

As of December 31, 1996, the Company had federal and state net operating
loss carryforwards of approximately $3,800,000 and $3,700,000, respectively.
The Company also had federal and state research and development tax credit
carryforwards of approximately $80,000 and $50,000, respectively. The net
operating loss carryforwards will expire at various dates beginning in 1998
through 2011, if not utilized.

Utilization of the net operating losses and credits is subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and credits
before utilization.

F-10
<PAGE>

SOLOPOINT, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

Deferred income taxes reflect the net tax effects of carryforwards and
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets at December 31,
are as follow:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................. $ 722,000 $ 1,500,000
Research credits.................................. 101,000 133,000
Capitalized research costs........................ 654,000 1,383,000
Other............................................. 23,000 36,000
----------- -----------
Total deferred tax assets.......................... 1,500,000 3,052,000
Valuation allowance for deferred tax assets........ (1,500,000) (3,052,000)
----------- -----------
Net deferred tax assets............................ $ -- $ --
=========== ===========
</TABLE>

The valuation allowance increased by $1,040,000 and $1,552,000 for 1995 and
1996, respectively.

NOTE 6. SHAREHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)

In February 1996, the Company amended its Articles of Incorporation to
increase the number of shares of authorized common and preferred stock to
35,000,000 and 25,000,000, respectively. The Company then issued 624,855
shares of Series A-7 preferred stock at $5.00 per share, in exchange for cash
of $1,200,500 and cancellation of $1,433,000 of convertible notes payable plus
$30,770 of accrued interest. Investors purchasing Series A-7 preferred shares
for cash were issued a warrant to purchase 50% of the number of shares they
purchased resulting in the issuance of warrants for 120,500 shares of Series
A-7 preferred stock at an exercise price of $5.00 per share. Holders of
convertible notes payable who converted their notes into Series A-7 preferred
and purchased shares of Series A-7 preferred for cash as requested by the
Company, were issued additional warrants to purchase the number of shares of
Series A-7 preferred stock that when combined with the warrants previously
issued in connection with the convertible promissory notes, equaled 50% of the
number of shares of Series A-7 preferred purchased in the financing by cash or
cancellation of indebtedness. This resulted in the issuance of warrants to
purchase an additional 66,900 shares of Series A-7 preferred stock at $5.00
per share. As part of the Series A-7 financing, 76,667 shares of Series A-6
preferred stock were converted into 92,000 shares of Series A-7 preferred
stock.

In connection with the completion of the Company's initial public offering
in August 1996, all of the shares of preferred stock were converted into
shares of common stock and the warrants to purchase Series A-7 preferred stock
converted into warrants to purchase common stock.

In July 1996 the Company amended its Articles of Incorporation to reduce the
number of shares of authorized preferred stock to 5,000,000 and to effect a
one for ten reverse stock split. All share and per share information has been
restated to reflect the reverse stock split.

Common Stock

Certain issuances of common stock are subject to repurchase agreements. At
December 31, 1995, there were approximately 23,990 shares subject to such
repurchase rights by the Company at $.01 to $.50 per share.

F-11
<PAGE>

SOLOPOINT, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

In February and May 1996, the Company issued a total of 215,000 and 100,000
shares respectively, of common stock at $.50 per share to certain officers in
exchange for promissory notes totaling $107,500 and $50,000 respectively,
secured by such stock. These notes receivable are recorded as an offset to
shareholders' equity in the balance sheet. The Company also issued 11,000
shares of common stock at $.50 per share for $5,500 in cash to a director.

Employee Stock Option Plan

The Company's 1993 Incentive Stock Plan (the Plan) provides for the grant of
incentive stock options and nonstatutory stock options to employees, directors
and consultants of the Company. Incentive stock options may be granted at
prices ranging from 100% to 110% (depending on the type of grant) of the fair
market value of the common stock on the date of grant as determined by the
Board of Directors. The price for nonstatutory stock options is determined by
the Board of Directors. The options generally vest at a rate of 25% one year
after the grant date and one-forty eighth every month thereafter. The vesting
and exercise provisions of the option grants are determined by the Board of
Directors. Common stock purchased prior to the Company's initial public
offering on August 6, 1996 under the Plan is subject to a right of repurchase
by the Company.

Activity under the Plan was as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
------------------------
WEIGHTED
NUMBER AVERAGE
OF SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Balance at March 26, 1993.............................. -- $ --
Granted............................................... 64,700 $ .40
------- -----
Balance at December 31, 1994........................... 64,700 $ .40
Granted............................................... 62,300 $ .50
Exercised............................................. (2,375) $ .40
------- -----
Balance at December 31, 1995........................... 124,625 $ .45
Granted............................................... 161,667 $3.07
Exercised............................................. (26,141) $ .44
Canceled.............................................. (75,060) $ .46
------- -----
Balance at December 31, 1996........................... 185,091 $2.77
Granted (unaudited)................................... 176,500 $2.03
Exercised (unaudited)................................. (390) $0.50
Canceled (unaudited).................................. (62,363) $2.53
------- -----
Balance at September 30, 1997 (unaudited).............. 298,838 $2.46
======= =====
</TABLE>

As of December 31, 1996, 90,079 shares were available for grant under the
Plan and 20,825 options outstanding were exercisable.

Stock-based Compensation

As permitted under FASB No. 123, "Accounting for Stock-based Compensation"
("FASB 123"), the Company has elected to follow Accounting Principles Board
Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25") in
accounting for stock-based awards to employees. Under APB 25, the Company
generally recognizes no compensation expense with respect to such awards.

F-12
<PAGE>

SOLOPOINT, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

Pro forma information regarding net income and earnings per share is
required by FASB 123 for awards granted after December 31, 1994 as if the
Company had accounted for its stock-based awards to employees under the fair
value method of FASB 123. The fair value of the Company's stock-based awards
to employees was estimated using a Black-Scholes option pricing model.
Limitations of the effectiveness of the Black-Scholes option valuation model
are that it was developed for use in estimating the fair value of traded
options which have no vesting restrictions and are fully transferable and that
the model requires the use of highly subjective assumptions including expected
stock price volatility. Because the Company's stock-based awards to employees
have characteristics significantly different from those of traded options and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its stock-
based awards to employees. The Company's plan awards employee stock options,
("Options"), at time of hire and occasionally as incentive awards. The fair
value of the Company's stock-based awards to employees for the years ended
December 31, was estimated assuming no expected dividends and the following
weighted-average assumptions:

<TABLE>
<CAPTION>
OPTIONS TO PURCHASE COMMON STOCK 1995 1996
-------------------------------- ---- -----
<S> <C> <C>
Expected life (in years)........................................ 3.33 4.00
Expected volatility............................................. 0.70 0.70
Risk free interest rate......................................... 6.42% 6.45%
Fair value...................................................... $.20 $1.44
</TABLE>

<TABLE>
<CAPTION>
OPTIONS
OPTIONS OUTSTANDING EXERCISABLE
-------------------------- ---------------
WEIGHTED
AVERAGE
REMAINING WEIGHTED WEIGHTED
NUMBER CONTRACT AVERAGE NUMBER AVERAGE
OF LIFE IN EXERCISE OF EXERCISE
RANGE OF EXERCISE PRICE SHARES YEARS PRICE SHARES PRICE
----------------------- ------- --------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
$ .40-$3.00..................... 93,591 9.07 $1.38 20,045 $ .79
$3.13-$4.25..................... 91,500 9.52 $4.20 780 $4.25
------- ------
185,091 20,825
======= ======
</TABLE>

The effect of applying the Black-Scholes value method in determining the
fair values of stock options did not result in pro forma net loss and net loss
per share that are materially different from historical amounts reported.
Therefore, such pro forma information is not presented herein.

Warrants

In connection with a debt financing agreement entered into in November 1993,
the Company issued warrants to purchase 8,570 shares of Series A-2 preferred
stock at $3.50 per share. The warrants are currently exercisable, subject to
certain antidilution provisions and expire ten years after the date of grant.
As of December 31, 1996 the Company had issued 6,400 warrants to a third party
at an exercise price of $5.00 per share as part of an equipment financing
agreement. In connection with the Series A-7 redeemable convertible preferred
financing agreement the Company issued warrants to purchase 244,270 shares of
Series A-7 preferred stock at $5.00 per share between August 1995 and March
1996. In connection with a bridge note, entered into in June 1996, the Company
issued warrants to purchase 60,000 shares of common stock at $5.00 per share.
In connection with the Company's initial public offering, in August 1996, the
Company issued warrants to purchase 135,000

F-13
<PAGE>

SOLOPOINT, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF SEPTEMBER 30, 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

shares of common stock at $6.00 per share. Upon the closing of the Company's
initial public offering on August 6, 1996, all warrants to purchase preferred
stock became exercisable for an equivalent number of shares of common stock at
an identical per share exercise price.

Warrants outstanding at December 31, 1996 are as follows:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
TYPE OF SHARES SHARES PER SHARE EXPIRATION DATE
-------------- --------- -------------- ---------------
<S> <C> <C> <C>
Common...................... 8,570 $3.50 November 2003
Common...................... 6,400 $5.00 December 2005
Common...................... 244,270 $5.00 August 1999-March 2000
Common...................... 60,000 $5.00 June 2000
Common...................... 135,000 $6.00 August 2000
</TABLE>

The Company believes that the value of these warrants at the date of
issuance was not material and no value has been attributed to them in these
financial statements.

Common Stock Reserved

As of December 31, 1996, the Company has reserved shares of common stock for
future issuance as follows:

<TABLE>
<S> <C>
Warrants........................................................... 454,240
Stock option plan.................................................. 275,170
-------
729,410
=======
</TABLE>

NOTE 7. RETIREMENT PLAN

The Company has a deferred compensation plan for all full-time employees
which qualifies under Section 401(k) of the Internal Revenue Code. The Plan
provides for discretionary employer contributions to the Plan. As of December
31, 1996 there have been no employer contributions to the Plan.

NOTE 8. COMMITMENT

The Company leases its facilities under a noncancelable operating lease that
expires on September 30, 1997. The lease is renewable at the Company's option
for one additional year. Total rent expense for the years ended December 31,
1995 and 1996 was $78,138 and $116,000, respectively. Future minimum lease
payments under the noncancelable facilities lease total $66,986.

NOTE 9. MAJOR CUSTOMERS

During the year ended December 31, 1996, two customers, Office Depot and
Hello Direct, accounted for approximately 56% and 19% of revenues,
respectively.

F-14
<PAGE>

SOLOPOINT, INC.
(a development stage company)

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
(INFORMATION AS OF SEPTEMBER 30, 1997 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)

NOTE 10. CONTINGENCIES (UNAUDITED)

The Company is in discussions with a manufacturer of computer technology
products that has a patent covering the storage of a telephone number used in
a menuing system to allow a caller to redirect their call to another
destination. The manufacturer asserts that some of the Company's products
infringe upon this patent. The Company intends to challenge either the
validity of the patent or its application to the Company's products or enter
into a licensing agreement with the patent holder. At this time, based upon
available information, management of the Company does not believe that the
ultimate outcome of this matter will have a material adverse effect on the
Company's financial position, results of operations or cash flows.

The Company may be involved from time to time in various legal proceedings
arising from the normal course of business activities. In management's
opinion, resolution of these matters is not expected to have a material
adverse impact on the Company's results of operations or its financial
position. However, depending on the amount and timing, an unfavorable
resolution of a matter could materially affect the Company's business,
financial condition and results of operations.

F-15
<PAGE>

[GRAPHICS]

A series of four pictures depicting the Company's products in various
settings. The upper left picture has the Company's SmartScreen product
displayed on a desk with the following text to the right of the picture:
"SmartScreen provides call screening, anytime pickup, message waiting light,
and fax machine support for telephone company Voice Mail customers." The
picture to the right is of the Company's SmartMonitor product displayed on a
desk and includes a semi-superimposed picture of a man on a cellular phone.
The text to the left of these pictures provides: "SmartMonitor allows mobile
professionals to screen their office calls from their mobile phone." The
picture at the bottom left is of the Company's SmartCenter product displayed
in an office setting. The text to the right of this picture provides:
"SmartCenter provides a complete call management environment including
menuing, follow-me phoning, selective call routing and remote and local
monitoring for the corporate professional."

<PAGE>

===============================================================================

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company, the Underwriter or by any other
person. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy, any security other than the shares of Common Stock offered
hereby nor does it constitute an offer to sell or a solicitation of an offer
to buy any of the securities offered hereby to any person in any jurisdiction
to which it is unlawful to make such an offer or solicitation to such person.
Neither the delivery of this Prospectus nor any sale made hereunder shall
under any circumstances create any implication that the information contained
herein is correct as of any date subsequent to the date hereof.

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary................................................................... 3
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 18
Dividend Policy........................................................... 18
Capitalization............................................................ 19
Dilution.................................................................. 20
Market for Common Stock................................................... 20
Selected Financial Data................................................... 21
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 22
Business.................................................................. 27
Management................................................................ 38
Certain Relationships and Related Transactions............................ 44
Principal Shareholders.................................................... 47
Description of Capital Stock.............................................. 50
Shares Eligible for Future Sale........................................... 52
Underwriting.............................................................. 53
Legal Matters............................................................. 55
Experts................................................................... 55
Additional Information.................................................... 56
Index to Financial Statements............................................. F-1
</TABLE>

===============================================================================
===============================================================================

6,000,000 SHARES
[LOGO OF SOLOPOINT, INC.]
SOLOPOINT, INC.
COMMON STOCK

-------------
PROSPECTUS
-------------

H.J. MEYERS & CO., INC.

DECEMBER , 1997

===============================================================================
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 317 of the California Corporation Code authorizes a court to award,
or a corporation's Board of Directors to grant, indemnity to any person who is
or was a director or officer in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. Article
V of the Company's Amended and Restated Articles of Incorporation (see Exhibit
3.1) provides for indemnification of its directors, officers, employees and
other agents to the maximum extent permitted under California law. Section 29
of the Company's Bylaws (see Exhibit 3.2) provides for indemnification of its
directors, officers, employees and other agents to the maximum extent
permitted under California law. In addition, the Company has entered into
Indemnification Agreements (see Exhibit 10.2) with its officers and directors.
Reference is also made to the Underwriting Agreement contained in Exhibit 1.1
hereto, pursuant to which the Underwriters will agree to indemnify officers
and directors of the Company against certain liabilities.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of Common Stock being registered. All amounts are estimates
except the SEC registration fee and the NASD filing fees.

<TABLE>
<S> <C>
SEC Registration fee............................................... $ 2,921
NASD filing fee.................................................... $ 1,514
Nasdaq SmallCap Market listing fee................................. $ 17,500
Underwriter's non-accountable expense allowance(1)................. $225,000
Printing and engraving expenses.................................... $130,000
Legal fees and expenses............................................ $170,000
Accounting fees and expenses....................................... $125,000
Consulting Fee..................................................... $ 72,000
Blue sky fees and expenses......................................... $ 20,000
Transfer agent fees................................................ $ 8,000
Miscellaneous fees and expenses.................................... $ 28,065
--------
Total............................................................ $800,000
========
</TABLE>
- --------

(1) Assumes a public offering price of $1.25 per share, $258,750 if the
Underwriter's over-allotment option is exercised in full.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

Since June 1, 1993, the Company issued, in private placement transactions
(collectively, the "Private Placement Transactions"), the following:

1. In January 1994, the Company issued an aggregate of 25,013 shares of Series
A-1 Preferred Stock at a price of $10.00 per share to the Company's
founders. The Company also issued 7,500 shares of Series A-1 Preferred
Stock in exchange for 300,000 shares of Common Stock held by the Company's
Founders pursuant to a recapitalization agreement. The Company received no
cash as a result of the recapitalization.

2. In May 1994, the Company issued 79,527 shares of Series A-2 Preferred Stock
and warrants to purchase 8,570 shares of Series A-2 Preferred Stock to
certain of the Company's investors, management and employees for an
aggregate consideration of $278,345.

3. In July and August 1994, the Company issued an aggregate of 143,750 shares
of Series A-3 Preferred Stock to certain of the Company's investors,
management and employees for an aggregate consideration of $575,000.

II-1
<PAGE>

4. In December 1994 and January 1995, the Company issued an aggregate of
100,796 shares of Series A-4 Preferred Stock to certain of the Company's
investors, management and employees for an aggregate consideration of
$453,579.

5. In March and April 1995, the Company issued an aggregate of 154,000 shares
of Series A-5 Preferred Stock to certain of the Company's investors,
management and employees for an aggregate consideration of $770,000.

6. In June 1995, the Company issued an aggregate of 85,000 shares of Series A-
6 Preferred Stock to certain of the Company's investors for an aggregate
consideration of $510,000.

7. In February 1996, the Company issued 548,186 shares of Series-7 Preferred
Stock and warrants to purchase 244,270 shares of Series A-7 Preferred Stock
to certain of the Company's investors, management and employees in exchange
for cash of $1,200,500 and cancellation of $1,463,767 of convertible notes
payable (including $33,767 of accrued interest). Investors purchasing
Series A-7 Preferred Stock for cash were issued a warrant to purchase 50%
of the number of shares they purchased resulting in the issuance of
warrants for 120,050 shares of Series A-7 Preferred Stock at an exercise
price of $5.00 per share. Holders of convertible notes payable who
converted their notes into Series A-7 Preferred Stock and purchased shares
of Series A-7 Preferred Stock for cash as requested by the Company, were
issued additional warrants previously issued in connection with the
convertible promissory notes, equaled 50% of the number of shares of Series
A-7 Preferred Stock purchased in the financing by cash or cancellation of
indebtedness. This resulted in the issuance of warrants to purchase an
additional 111,500 shares of Series A-7 Preferred Stock at $5.00 per share.
As part of the Series A-7 financing, approximately 76,667 shares of Series
A-6 Preferred Stock were converted into approximately 92,00 shares of
Series A-7 Preferred Stock.

8. In February 1996, the Company issued 140,000 shares of Common Stock to
Edward M. Esber, Jr., the Chief Executive Officer, President and Director
of the Company, in exchange for a promissory note in the amount of $70,000.

9. In May 1996, the Company issued 60,000 shares of Common Stock to Mr. Esber,
in exchange for a promissory note in the amount of $30,000.

10. In February 1996, the Company issued 75,000 shares of Common Stock to
Arthur G. Chang, the Chief Operating Officer and Vice President of
Research and Development of the Company, in exchange for a promissory note
in the amount of $37,500.

11. In May 1996, the Company issued 40,000 shares of Common Stock to Mr.
Chang, in exchange for a promissory note in the amount of $20,000.

12. In June 1996, the Company issued $1,000,000 and $500,000 in principal
amount of the Convertible Notes to 4C Ventures and Ameritech,
respectively. The Convertible Notes were automatically converted into
302,544 shares of Common Stock upon the closing of the Company's initial
public offering in August 1996. In connection therewith, the Company
granted such parties warrants to purchase an aggregate of 60,000 shares of
Common Stock at a per share exercise price of $5.00. In addition, the
Company granted to each of 4C Ventures and Ameritech the right to nominate
one member of the Board of Directors as long as they respectively own more
than 3% of the outstanding Common Stock of the Company. Certain principal
shareholders of the Company have agreed to vote in favor of such nominees.

The issuance of the stock, promissory notes and warrants were deemed to be
exempt from registration under the Securities Act in reliance on Section 4(2)
promulgated under the Securities Act as transactions by an issuer not
involving a public offering or on Rule 701 promulgated under the Securities
Act. In addition, the recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates issued in such
transactions. All recipients had adequate access, through their relationships
with the Company, to information about the Company.

II-2
<PAGE>

ITEM 27. EXHIBITS

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
.1.1 --Form of Underwriting Agreement.
.1.2 --Financial Consulting Agreement.
+3.1 --Company's Articles of Incorporation, as currently in effect.
+3.2 --Company's Bylaws, as currently in effect.
+4.1 --Specimen Certificate of Company's Common Stock.
.4.2 --Form of Representative's Warrant.
+4.3 --Amended and Restated Information and Registration Rights
Agreement.
+4.4 --Form of Series A-2 Preferred Stock Warrant and Warrant Amendment
Agreement.
+4.5 --Form of Series A-7 Preferred Stock Warrant.
.5.1 --Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
+9.1 --Voting Agreement (included in Exhibit 10.9).
+10.1 --Multi-Tenant Net Lease Agreement dated August 24, 1995, between
the Company and Del Enterprises, as amended.
+10.2 --Form of Indemnification Agreement.
+10.3 --Purchase Agreement dated December 18, 1995, by and between
Ameritech Corporation and the Company.
+10.4 --Supplier Agreement dated February 22, 1996, by and between Hello
Direct, Inc. and the Company.
+10.5 --Amended and Restated 1993 Incentive Stock Plan.
+10.6 --1995 Profit Sharing 401(k) Plan.
+10.7 --Employment Letter dated October 26, 1995, between the Company
and Edward M. Esber, Jr.
+10.8 --Loan Agreement dated as of December 11, 1995, between SoloPoint,
Inc. and Venture Lending & Leasing, Inc.
+10.9 --Bridge Loan and Warrant Purchase Agreement dated June 14, 1996,
by an between Ameritech Corporation, 4C Ventures, L.P., and the
Company, including a Security Agreement, a Patent Security
Agreement, a Voting Agreement, an Amended and Restated
Information and Registration Rights Agreement, Warrants and
Secured Convertible Promissory Notes.
+10.10 --Employment Letter dated February 1, 1996, between the Company
and Arthur Chang.
+10.11 --Employment Letter dated July 1, 1996, between the Company and
Bryan Kerr.
+10.12 --Agreement dated June 14, 1996 between Ameritech Corporation and
the Company.
*10.13 --Employment Letter dated October 8, 1996, between the Company and
Ronald J. Tchorzewski.
**10.14 --Line of Credit Agreement with Silicon Valley Bank dated February
7, 1997.
****10.15 --Product Referral Agreement dated May 1, 1997 amongst the
Company, Pacific Bell and Pacific Bell Information Services.
.11.1 --Statement Regarding Computation of Net Income (Loss) Per Share.
.23.1 --Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2 --Consent of Ernst & Young LLP, Independent Auditors (see page II-
6).
.24.1 --Power of Attorney (see page II-5).
.27.1 --Financial Data Schedule
</TABLE>
- --------
+ Incorporated by reference to the Registration Statement on Form SB-2 (No.
333-5056-LA) filed by the Registrant with the Securities and Exchange
Commission and declared effective on August 6, 1996.
* Incorporated by reference to the Form 10-KSB (No. 000-21037) filed by the
Registrant with the Securities and Exchange Commission on March 31, 1997.
** Incorporated by reference to the Form 10-QSB (No. 000-21037) filed by the
Registrant with the Securities and Exchange Commission on May 15, 1997.
**** Confidential treatment has been requested with respect to certain
portions of this Exhibit. The omitted portions have been filed separately
with the Securities and Exchange Commission.
. Previously filed.

II-3
<PAGE>

ITEM 28. UNDERTAKINGS

The undersigned Company hereby undertakes to provide to the Underwriter at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification by the Company for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the provisions referenced in Item 24 of this
Registration Statement or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer, or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered hereunder, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes:

That for purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.

For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

The Company further undertakes to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the Offering.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM SB-2 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF LOS GATOS, STATE OF CALIFORNIA, ON DECEMBER 5, 1997.

SOLOPOINT, INC.

/s/ Edward M. Esber, Jr.
By: _________________________________
EDWARD M. ESBER, JR.
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND DIRECTOR

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ Edward M. Esber, Jr. President, Chief December 5, 1997
_____________________________________ Executive Officer
EDWARD M. ESBER, JR. and Director
(Principal
Executive Officer)

Ronald J. Tchorzewski* Chief Financial December 5, 1997
_____________________________________ Officer and Vice
RONALD J. TCHORZEWSKI President of
Finance (Principal
Financial and
Accounting Officer)

Arthur G. Chang* Chief Operating December 5, 1997
_____________________________________ Officer and Vice
ARTHUR G. CHANG President of
Research and
Development

Charlie Bass* Chairman of the December 5, 1997
_____________________________________ Board of Directors
CHARLIE BASS

Patrick Grady* Director December 5, 1997
_____________________________________
PATRICK GRADY

Giuliano Raviola* Director December 5, 1997
_____________________________________
GIULIANO RAVIOLA

Charles Ross* Director December 5, 1997
_____________________________________
CHARLES ROSS

/s/ Edward M. Esber, Jr.
*By: ________________________________
EDWARD M. ESBER, JR.
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the references to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated February 10,
1997, in Amendment No. 4 to the Registration Statement, (Form SB-2 No. 333-
33263) and related Prospectus of SoloPoint, Inc. for the registration of
7,500,000 shares of its common stock.

Ernst & Young LLP

Palo Alto, California

December 5, 1997

II-6
<PAGE>

EXHIBIT INDEX